Amsterdam Court of Appeal rules that an incorrectly issued VAT identification number by the Tax Authorities does not prevent reverse charge of VAT.
VAT ID number
The case concerns a Dutch BV to which the Inland Revenue spontaneously issues a VAT identification number in 2010. This occurs simultaneously with the notification that the Tax Authorities have classified the BV as an entrepreneur performing VAT-exempt services (as a result of which no VAT returns are issued to the BV).
In the years 2016 to 2020, the BV purchases consultancy services from service providers established in other EU Member States and provides those service providers with its Dutch VAT identification number. Those service providers therefore shift the collection of VAT on their services to the BV. However, the BV does not remit that VAT. This VAT (over €6 tonnes) is subsequently levied (and increased by interest and penalties) by the Tax Authorities.
The BV disputes this after-tax assessment, arguing that the VAT identification number was wrongly spontaneously assigned to it by the Tax Authorities. Moreover, the BV argues that it could not escape the VAT identification number (because the allocation of a VAT number is not open to the possibility of filing an objection).
However, the court ruled that the BV could have asked the tax authorities to withdraw the VAT identification number. The additional tax assessment therefore stands.
Court
The court had previously considered that the circumstance that the BV has been allocated a VAT identification number has the effect that, for the purposes of the rules for determining the place of supply of services, the BV is regarded as a VAT entrepreneur. The place of supply of services for consultancy services is then where the customer is established; therefore, in this case, in the Netherlands.
The circumstance that the BV provides its VAT identification number to foreign service providers has the effect that those service providers have rightly shifted the levying of VAT to the BV. And then the BV then has the obligation to remit this reverse charge VAT.