VAT (Value Added Tax)

VAT (Value Added Tax)

Every organization will have to deal with VAT (Value Added Tax). Even if business activities are exempt from VAT, VAT still plays a role in the purchase of goods and services. VAT is also known as turnover tax. This is because it concerns the tax that is indirectly levied on the turnover from the sale of goods and services.

The VAT rate levied varies for certain goods and services. The standard VAT rate is 21%. A VAT rate of 9% is often applied to basic necessities. A 0% VAT rate may be applied to certain goods and services supplied to another country within the European Union. Furthermore, certain professions are exempt from VAT. Education is an example of this.

Finally, if an organization chooses to make use of the Small Business Scheme (KOR), no VAT needs to be charged. Additionally, no VAT return needs to be filed.

VAT disputes with the Tax and Customs Administration

VAT is simple in theory, but in practice, disputes with the Tax and Customs Administration often arise. Examples include an incorrectly applied rate, wrongly claimed input tax, or doubt as to whether a service is exempt or not. If the inspector issues a correction, an additional assessment: the underpaid VAT is recovered, usually increased by tax interest and a default or penalty fine. A default fine for non-payment (or late payment) amounts to 3% of the VAT amount (minimum €50); in cases of intent or gross negligence, a penalty fine can reach up to 100% of the recovered VAT. Our lawyers and (corporate) legal experts assess whether the correction holds up legally and whether the fine is justified and proportionate.

Objection and appeal against a VAT assessment

If you disagree with an additional assessment or decision, you may an objection with the Inspector within six weeks of the date of issue. A well-substantiated notice of objection is decisive: it must substantiate why the Tax and Customs Administration's position is incorrect, supported by the relevant facts and VAT rules. If the objection is rejected, an appeal is available to the District Court, followed by an appeal to the Court of Appeal and, if necessary, cassation to the Supreme Court. For VAT questions concerning the interpretation of the European VAT Directive, a preliminary question may be submitted to the Court of Justice of the European Union. We handle these proceedings from start to finish and monitor all deadlines to ensure you do not forfeit your rights.

Fines and VAT fraud

In addition to an additional assessment, the Tax and Customs Administration can impose a fine, and in serious cases, fiscal criminal law may come into play. In the case of VAT fraud (for example, carousel fraud involving intra-Community supplies), an entrepreneur runs the risk of having the right to deduct input tax or the zero rate denied, even if they acted in good faith but “knew or ought to have known” that they were part of a fraudulent chain. The legal boundary between an error and culpable conduct is finely tuned. Our specialists defend your interests against tax fines and ensure that the burden of proof remains with the inspector, where it belongs.

VAT on real estate, international trade and partnerships

A number of VAT topics require special legal attention. In the purchase, sale, or lease of real estate, the interplay with transfer tax, the option for VAT-taxed supply or lease, and the adjustment scheme play a role. In cross-border transactions, the issues concern the place of supply, intra-Community supplies, and the application of the zero rate; this directly relates to our international tax law. For groups of companies, a VAT fiscal unity can be advantageous but entails joint and several liability. Furthermore, holding companies often struggle with the question of the extent to which they may deduct input VAT as VAT taxable entities. We structure these situations in advance and litigate where necessary.

Exemptions, Small Business Scheme and the correct legal form

Whether you are liable for VAT and which regime applies depends on the nature of your activities and your legal form. Certain sectors are exempt, such as education, healthcare, and (parts of) financial services, while small business owners can opt for the Small Business Scheme (KOR). An exemption sounds attractive, but it also means that you cannot reclaim the VAT on your purchases; this requires careful consideration. We assess your position, prevent surprises afterwards, and ensure that your administration and invoices are VAT-compliant.

What MKB Juristen does for you

MKB Juristen works with mixed teams of lawyers and in-house counsel, ensuring you have both sharp tax legal advice and litigation under one roof. We assist both international corporations and the baker around the corner: from a one-off check of your VAT position to conducting full proceedings against the Tax and Customs Administration. In practical terms, this means acting quickly following an additional assessment, filing a strongly substantiated objection, and proactively considering VAT regarding real estate, export, and restructuring. This VAT issue is part of our broader expertise in Tax Law, where all your tax interests converge.