• Service: Tax, Global Indirect Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 10/25/2013

Netherlands - Court decision eases rules for forming VAT groups 

October 25:  A decision of the Supreme Court extends the scope of a condition—the economic link condition—for forming a value added tax (VAT) group.

In the Netherlands, persons working together in a group may—by forming a VAT group—avoid VAT on intra-group transactions, and in some situations, increase their right to recover VAT.

Multiple persons can form a VAT group if certain conditions are satisfied. In practice, the economic link condition raises the most questions because that link is more difficult to measure than other links—the financial and organizational links—that are also conditions for forming a VAT group.

The 11 October 2013 decision of the Supreme Court extends the scope of the economic link, thereby making it easier to create a VAT group.

KPMG observation

The decision may be particularly valuable for VAT-exempt persons working together as a group, such as care and educational institutions, and banks and insurers.

Also, the decision also may have implications for persons whose right to recover input VAT is limited.

Read an October 2013 report prepared by the KPMG member firm in the Netherlands: Supreme Court makes it easier to create a VAT group

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