The District Court of the Northern Netherlands recently ruled that the VAT shown on receipts is not deductible. What was the issue?
VAT invoice
One of the conditions for claiming VAT relief is that a valid VAT invoice has been issued. Such a VAT invoice must meet a number of requirements. You can find these in our factsheet The invoice for VAT purposes.
However, if the invoice amount, including VAT, does not exceed €100, simplified invoicing requirements apply. These are also set out in the factsheet mentioned above. Most receipts qualify as such a simplified (VAT) invoice.
VAT deduction
However, in order to deduct the VAT shown on a VAT invoice – whether simplified or not – other conditions must also be met:
- the VAT invoice must have been issued to the business owner;
- the service(s) specified in the invoice must have been provided to the trader;
- The supply(s) must relate to supplies made by the trader on which VAT is chargeable.
Burden of proof
The Court first of all finds that the burden of proof – that is, that all the conditions applicable to VAT deduction have been met – rests with the trader claiming the VAT deduction. The Court then rules that the trader has not met this burden of proof. The business has not demonstrated that the invoices and receipts, copies of which have been submitted, relate to costs incurred by it in its capacity as a business. Nor has it demonstrated that these costs are directly linked to the business’s taxable supplies. The mere fact that the company’s name was written by hand on the invoices is not sufficient to establish that the invoice was issued to the company.