The Court in The Hague rules that the VAT paid on the purchase of two luxury cars is not deductible.
BV
The case concerns a private limited company (BV) that was incorporated in 2018 for the purpose of acquiring, disposing of, managing and investing in cars, including, in particular but not exclusively, classic cars.
In 2018, this private limited company purchased two cars: a Porsche 964 and a Porsche 911. The private limited company deducts the VAT paid on the purchase of the cars, totalling €248,850. In addition, it deducts the VAT on the company’s incorporation costs and the VAT on the costs of transporting the cars.
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However, the private limited company has failed to provide sufficient evidence that it qualifies as a trader for VAT purposes. In itself, the intention to set up a business, combined with the (initial) investments made for that purpose, is sufficient. Furthermore, it follows from established case law that VAT levied on transactions undertaken in preparation for the actual business activity is already eligible for deduction.
However, the burden of proof in this regard does rest explicitly with the business claiming VAT deduction. The Court ruled that the private limited company had failed to provide sufficient objective evidence to substantiate that it was going to operate a VAT-registered business. It argued that the trade in exclusive cars does not take place via the channels normally used in the car trade (showroom, website and the like). However, it did not specify how it intended to establish its position in this market, nor through which channels or contacts this was to be achieved. Nor was it made clear on what data the forecast submitted was based.