That is the conclusion reached by the District Court of the Northern Netherlands in a case which deals with the deduction of VAT on the purchase of solar panels.
Indoor tennis hall
The case concerns the owner of an indoor tennis centre. In 2018, he had solar panels installed on the roof of the centre and claimed a full VAT refund on the purchase of those solar panels. As the business owner did not declare any VAT-liable turnover in 2018 and 2019, the Tax and Customs Administration is investigating whether this refund was correctly granted. Following this investigation, the Tax and Customs Administration issued additional tax assessments requiring the business owner to repay the VAT.
One achievement?
The business owner argues before the Court that there are two separate supplies: 1. the letting of tennis courts, the canteen and a fitness centre; and 2. the supply of electricity to the tenants and to the electricity company. The letting is exempt from VAT, but the supply of electricity is a VAT-taxable activity.
The court concludes that this constitutes a single supply: the VAT-exempt letting, which includes the supply of electricity. Consequently, the solar panels are used for VAT-exempt supplies, and the VAT charged on their purchase has been correctly levied retrospectively.
The Court notes that the tennis courts do not have separate meters, but that there is a single meter for all six courts. As a result, it is not possible to track electricity consumption on a tenant-by-tenant basis. Although there are separate meters for the canteen and the fitness centre, the tenants of these premises were not charged a separate amount for the electricity supplied. Insofar as the rent is set out in written contracts, these do not include a separate charge for the supply of electricity. Nor was VAT charged to the electricity supplier. The mere fact that the tenants could, in theory, choose their own energy supplier because separate meters are in place is not, in the Court’s view, sufficient to regard the letting and the supply of electricity to the tenants as separate supplies for VAT purposes.