Netherlands: VAT deduction by pension fund, costs recharged to company

Netherlands: VAT deduction by pension fund

An appeal pending before the Dutch Supreme Court is from a judgment of the Court of Appeals that held that value added tax (VAT) on costs that are not “recharged” by a pension fund to the employer is non-deductible.

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The question the Supreme Court was asked to address was whether a company pension fund was correct in deducting the amount of input VAT charged on the costs that the company pension fund recharged to the group entities for which it operates the pension plan. 

The appeal is from a decision of the Court of Appeals that confirmed that the recharging of costs must be regarded as a payment for a VAT-able service that a company pension fund provides to the employer and that VAT on costs directly allocable to the VAT-able service could be deductible. 

After the appeal to the Supreme Court, the Advocate General issued an opinion in June 2016 in which he concluded that further examination of the facts must show whether and, if so, which VAT-able service is provided in exchange for the recharged costs, and only then can it be assessed whether the company pension fund is entitled to deduct the VAT on the costs recharged to the employer. The Supreme Court now will consider this opinion and issue a final judgment with respect to the issue relating to recharge costs.

 

Read a July 2016 report prepared by the KPMG member firm in the Netherlands: Opinion of Advocate General: Pension fund is not automatically entitled to deduct the VAT on costs recharged to the employer

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