Zeeland-West Brabant District Court concludes that the VAT on the gardener’s invoices is not (partially) deductible for the private limited company.
The case concerns a private limited company (BV) which carries out its activities (consultancy work) from an office space adjacent to the private residence of its director and majority shareholder (DGA). The entire property is owned by the DGA.
For the landscaping and paving work, the gardener issues four invoices to the director and two invoices to the private limited company. In its VAT return, the private limited company deducts the VAT on part of these six invoices, namely the VAT on:
- 100% relating to the cost of constructing car parks;
- 75% relating to the cost of laying a clinker path;
- 75% of the planting next to the car parks;
- 50% relating to the cost of the access road;
- 25% of the costs for the back garden.
Who is the customer?
The Tax and Customs Administration refuses to allow this deduction because the private limited company is not the recipient of the service. The Court agrees with this. The basic principle is that the person to whom the invoice is issued is the recipient of the services stated on the invoice. However, this is not the case if the Tax and Customs Administration provides evidence that someone else is the actual recipient of the services.
In this case, the Tax and Customs Administration has succeeded in proving its case. The court bases this conclusion primarily on the fact that the quotation for the work was issued in the name of the director and shareholder and was signed by the director and shareholder in a private capacity (the quotation does not indicate that the director and shareholder was signing partly on behalf of the private limited company).
According to the Court, the mere fact that two of the invoices are in the name of the private limited company is insufficient to conclude that a legal relationship also exists between the gardener and the private limited company. This is all the more so because the work covered by these invoices also relates to parts of the plot that are used for private purposes.
The Court also takes into account the fact that there is no evidence of (or any record of) any agreements between the director and shareholder and the private limited company regarding the plot of land or its use.
Deduction nonetheless
Incidentally, in this case, a partial VAT deduction was granted after all. The parties had in fact already reached agreement on this during the audit carried out by the Tax and Customs Administration, meaning that this deduction was no longer at issue in the proceedings. Without those agreements already reached with the Tax and Customs Administration, the private limited company would most likely have been unable to claim the full VAT deduction.