What about VAT deduction when the entrepreneur performs services abroad? North Holland District Court recently addressed such a situation.
Educational exemption
The adjudicated case concerns a taxpayer who is registered as an educational institution in the Central Register of Short Professional Education (CRKBO). The vocational education provided by this taxpayer is therefore exempt from VAT. The input VAT attributable to these services may then not be deducted.
The entrepreneur provides some of the courses in the Netherlands, some in other EU member states and some outside the EU. The parties agree that VAT is not deductible insofar as the courses are provided in the Netherlands. The entrepreneur does believe he is entitled to deduct VAT for the courses provided outside the Netherlands.
Article 15 of the OB Act provides that VAT charged on costs relating to services performed outside the Netherlands is deductible if there would have been a right to deduct if those services had been performed in the Netherlands. Based on this provision, the Court rejected the entrepreneur's argument. This does not alter the fact that the condition imposed on the educational institution for vocational education to be registered in the CRKBO only applies in the Netherlands.
In respect of supplies in the following specific categories listed in the law, VAT may be deducted despite the fact that these supplies would be exempt from VAT in the Netherlands:
- financial operations;
- acts of insurance.