According to the tax court, the commercial operation of a yacht by one private limited company does not substantiate the entrepreneurial status of the other private limited company.
Delivery = acquisition
A private limited company has purchased a motor yacht for €38,500. The supplier is supplying the yacht to the company as an intra-Community supply and is therefore applying the 0% rate.
Following an audit, the Tax and Customs Administration concludes that an intra-Community supply has indeed taken place. However, the private limited company fails to pay the VAT relating to the intra-Community acquisition in its VAT return. That VAT (21% of €38,500 = €8,085, plus €173 in tax interest) is therefore assessed retrospectively. The Tax and Customs Administration also imposes a late payment penalty of 10%.
Deduction
The private limited company is attempting to avert disaster by arguing that it is entitled to deduct the VAT due on the intra-Community acquisition. The Zeeland-West Brabant District Court considers, however, that the BV has not demonstrated this to a sufficient degree.
The private limited company states that the intention is for the yacht to be leased to a subsidiary, which will operate it commercially. The yacht was refurbished in 2017, and in 2018 and 2019 the subsidiary leased it out commercially to several clients. Advertising was also carried out to promote the leasing service, a website was set up and a commercially attractive mooring was rented.
However, the court concludes that it is not plausible that the yacht was made available to the subsidiary on a permanent basis, rather than merely on an occasional basis as and when required. The court therefore does not regard the BV as a VAT-registered business, with the result that there is no entitlement to deduct VAT.
A non-VAT-registered business must, however, pay VAT on the intra-Community acquisition of a means of transport.
The court concludes that the BV is not a VAT-registered business on the basis that no tenancy agreement has been concluded. Furthermore, no VAT-liable turnover was declared in 2017. The private limited company has only provided information to substantiate the subsidiary’s commercial use, but this does not substantiate its own status as a VAT-registered business.
Fine
With regard to the fine, the court considers that this is a default fine. Such a fine may only be waived in the event of the absence of any fault (avas) or where there is a defensible position. However, no such circumstances have been established. The court also considers the fine to be appropriate and justified; however, as the reasonable time limit has been exceeded, the fine is nevertheless reduced by 15%.