The sale of a horse that remains in the EU for some time after the sale is subject to Dutch VAT.
This was decided by the Zeeland-West Brabant District Court in a case in which a Dutch entrepreneur sells a jumping horse to a US equestrian centre in 2016. The invoice is dated 18 July 2016. No VAT is charged on this invoice. The horse is exported to the United States on 17 November 2016.
0% rate
The Dutch entrepreneur applies the 0% rate, which applies when exporting goods from the European Union, to the supply of the show jumper. Based on established case law, he must demonstrate that all conditions for the application of this tariff are met. The condition is that the horse is transported to the United States as part of the supply.
Exports related to delivery
The Inland Revenue considers that this condition is not met and retrospectively levies 21% Dutch VAT. The court agrees. Competition records from the FEI show that a son of the US buyer rode the horse in EU competitions prior to export. A medical report, prepared by Wageningen University & Research on 8 November 2016, lists the buyer as the owner of the horse. These circumstances, combined with the lapse of time (of over 4 months) between the sale and the export of the horse lead the court to conclude that the power to dispose of the horse as owner had already passed to the US buyer before the horse was exported. For VAT purposes, the moment of delivery of a good is the moment when the power to dispose of the good as owner has passed.
In our article Supply exports we describe a position taken by the Inland Revenue's VAT Knowledge Group on the application of the 0% rate when exporting horses.
The issues outlined in this article obviously arise not only with regard to the sale and delivery of horses, but also with regard to other goods that remain in the Netherlands (or elsewhere in the EU) for some time after the sale.