Dutch VAT mentioned on an invoice must be paid in the Netherlands. This also applies if the VAT is erroneously mentioned on the invoice.
The zaak on which the Zeeland-West Brabant District Court ruled, concerns a sole proprietorship whose activities consist of managing international projects in the field of industrial refrigeration systems. The activities are carried out worldwide.
An audit carried out by the Inland Revenue revealed that the entrepreneur failed to declare the VAT of a number of invoices in his VAT returns. The Inland Revenue levied this VAT after the fact on the basis of Section 37 of the Turnover Tax Act 1968.
Loss of tax revenue
The court considered that, having established that the invoices contained Dutch VAT, that VAT was due in the Netherlands on the basis of the mere fact that it was mentioned on the invoices. This does not change whether, as the entrepreneur argues, this Dutch VAT was wrongly mentioned on the invoices. As long as the recipient of the invoice can use the invoice to exercise his right to deduct VAT, the risk of loss of tax revenue exists and remittance is justified under the aforementioned Article 37. The Court considered that it had neither been stated nor shown that the risk of loss of tax revenue had been eliminated (in time), for example by preparing credit invoices.
Gross fault
The Tax Authority increases the retrospective VAT with a penalty of 50%. The Court ruled that the Tax Authorities succeeded in proving that it was the entrepreneur's gross negligence that underpaid VAT, thus justifying this penalty. The Court considers, among other things, that the entrepreneur did pay the VAT on part of the invoices he issued in the Netherlands. He should therefore have understood that filing VAT returns in the way he did could result in underpayment of VAT.
The fine will still be reduced by the court because the proceedings took too long.