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.
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
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.