In a case at Zeeland-West Brabant District Court, an entrepreneur runs into the problem of not being able to conclusively prove the transport of goods collected from him (collection transaction).
0-rate
The 0% VAT rate applies - among other things - to intra-Community supplies (ICL). Conditions of an ILC are that supplies are made to a VAT entrepreneur established in another member state of the European Union AND that the goods are actually dispatched or transported from one member state to another. The entrepreneur applying the 0% rate must prove that these conditions are met.
Car dealer
The case before the Court concerns a car dealer, which sells used cars (mainly former lease cars) to regular customers in Bulgaria. The buyers pay for the cars in advance. They are responsible for the transport and collect the cars in the Netherlands.
The trader processes the supply as an ILC in its Dutch VAT return, but after some time it turns out that the buyers in Bulgaria did not declare intra-community complications. This so-called mismatch prompts the Dutch tax authorities to investigate the case further. The outcome of this investigation is a post-tax VAT assessment for 2017 in the amount of €478,430, plus a penalty of €119,607 (25% of the post-tax VAT) and €18,127 tax interest.
Insufficient evidence
The court ruled that the car dealer had failed to meet its burden of proof. Insufficient weighty objective evidence was submitted. The information submitted was largely made up after the fact, which makes it implausible that at the time of collection by the buyer, any expression of intention to transport the cars to Bulgaria was made.
The Court also weighs the information from the international data exchange. Information from the Bulgarian tax authorities, which can be read in the ruling, shows that the buyers were only registered as VAT entrepreneurs in Bulgaria for a short time and only submitted zero declarations there. The information provided by the car dealer is considered by the Court to be insufficient to invalidate the information received from the Bulgarian tax authorities.
Fine
Remarkably, the court did dismiss the penalty fine in its entirety. The Inland Revenue did not provide enough evidence to prove that it was due to the car dealer's gross negligence that too little VAT was levied. With reference to a ruling of the Supreme Court in 2020, the court concluded that there was no gross negligence because the car dealer was assisted by an expert adviser.