VAT is due on the rental of business seats. Entrepreneurs who perform VAT-taxed services obviously want to deduct that VAT. Court of Appeal of Den Bosch recently ruled that that deduction is allowed for business seats in a football stadium, which were used by business associates. But not for business seats used by employees.
Business seats
Many entrepreneurs use business seats in customer relationship management. Customers or potentials are invited to attend a sports club match together with the entrepreneur. For this purpose, the entrepreneur rents one or more business seats from the sports club.
Burden of proof
The court is crystal clear on the division of the burden of proof. The tax authorities must prove that the VAT on the business seat rental is not deductible. That burden of proof is reversed when the business owner has not fulfilled his administration obligation.
In the case decided by the Court, the entrepreneur had not recorded who had used the business seats on which days. This meant that the obligation to keep records had not been met. However, the tax authorities had failed to issue an information decision. This formal error prevented the reversal of the burden of proof.
TIP: avoid reversal of the burden of proof by properly administering who sat on a business seat at what times.
Customer: do deduct VAT
For the customer, the use of the business seat is a business gift/gift. VAT imposed on business gifts is deductible to the extent that the client is entitled to deduct VAT. This is the application of the Sales Tax Exclusion Decree (the BUA).
Employee: no VAT deduction
Naturally, the director-major shareholders (dga) accompanied the (potential) customers in their use of the business seat. The court ruled that when the seats were made available to staff, the personal interest of the employee prevailed rather than the business interest. Therefore, this VAT was not deductible.