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Written by:
Bas Hollenberg


Turnover tax for non-entrepreneurs

The turnover tax directive has opened up the opportunity for EU Member States in preven­tion of distortion of competition to decide that a particular service having been performed out­side the EU for subsequent sourcing within the Member State’s own territory is to be regarded as having been performed within the Member State itself. The Netherlands has availed itself of this option.

Dutch legislation stipulates that particular services supplied to Dutch-based bodies that do not have entrepreneurial status are deemed to have been performed within the Netherlands. The Tax and Customs Administration by virtue of this stipulation imposed an additional turn­over tax assessment on the Dutch-based (private limited-liability) intermediate holding com­pany of an international conglomerate, which holding company had sourced consultancy ser­vices from US and Canadian based law firms in connection with the acquisition of a participat­ing interest. The holding company went on to challenge the additional tax assess­ment, arguing that the Dutch legal stipulation was inconsistent with the provision as per the direc­tive. The Amsterdam Court of Appeal ended up dismissing this view.

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