There are quite high requirements for good records. Not only for proving that the right amounts of tax have been paid. Also to be allowed to apply specific tax schemes.
No margin scheme
This is where an entrepreneur finds out, who was using the margin scheme, with globalisation scheme, in the context of VAT. Amsterdam Court of Appeal namely ruled that these schemes could not be applied because the entrepreneur did not have the administration in order. In the cassation proceedings, the Advocate General has now concluded that the Court is right. However, the final word is of course up to the Supreme Court.
The margin scheme means that VAT is not due on the selling price of the good sold, but from the margin. The margin is the difference between the selling price and the purchase price of the good. The margin scheme can be applied by resellers of used goods, art objects, objects for collections and antiques.
Traders applying the globalisation scheme do not determine the margin per individual margin item, but per VAT period.
Administration
For VAT, it is required that the company keeps records in such a clear and orderly manner, stating such particulars, that the tax due for each period can be determined from them. You can find this in paragraph 5 of article 31 of the Turnover Tax Implementing Decision 1968. This obligation is in addition to the general administration obligation of Section 52 of the General Act on State Taxes.
The flaws in the administration, on which the court based its decision, are:
- excessively summary or falsified purchase receipts;
- Failure to keep regular records of cash receipts;
- and failure to adequately administer the flow of goods.
To apply the globalisation scheme, the entrepreneur should have sought permission from the Inland Revenue. That such permission had been granted could not be proved.
Also for
The specific administration obligations for VAT also apply to:
- deliveries of goods and services provided to and by the entrepreneur;
- intra-Community acquisitions of goods made by the entrepreneur;
- sourcing goods imported by the entrepreneur;
- the dispatch or delivery of goods intended by the trader for export from the Union or warehousing.