Netherlands: VAT exemption for cost-sharing groups | KPMG | GLOBAL

Netherlands: VAT exemption for cost-sharing groups

Netherlands: VAT exemption for cost-sharing groups

The Court of Justice of the European Union (CJEU) on 21 September 2017 rendered judgments in cases (and in infringement proceedings) that conclude the value added tax (VAT) exemption for cost-sharing groups does not apply to the financial and insurance sectors.

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KPMG observation

The VAT exemption for cost-sharing groups is frequently applied in the financial and insurance sectors—in the Netherlands and in other EU Member States. The CJEU’s finding that this VAT exemption does not apply to the financial and insurance sectors, thus, is significant for these industries.

In accordance with the CJEU’s judgments, tax professionals have expressed a belief that application of the Dutch VAT exemption for cost-sharing groups to the financial and insurance sectors (provided all conditions are met) cannot be corrected for the past. It cannot simply be considered to be deleted from the statutory provisions (“exemptions” section) of the Dutch VAT law. 

Furthermore, the implementation rules indicate that the VAT exemption for cost-sharing groups in the Netherlands does apply to the financial and insurance sectors, for example, due to the explicit exclusion of damage assessment activities and pension administration activities. The question is whether and to what extent such specific elements of Dutch VAT law and the implementation rules apply, until such time that they are amended, and whether they also offer protection for future periods. In addition, in situations when there is an agreement for application of the VAT exemption for cost-sharing groups with the Dutch tax authorities, taxpayers need to give consideration to the general principles of good governance.

 

Read a September 2017 report prepared by the KPMG member firm in the Netherlands

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