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Capital Goods Scheme; VAT claw back



The Netherlands have a rule, that provides for a clawback scheme on investment goods (goods that are/should be depreciated for direct tax purposes). Under Dutch law, the entire VAT amount on the purchase of such goods, should be recalculated upon the start of the use, and again at the end of the first year that goods have been put to use. Should it turn out at those points in time that the VAT deduction right deriving from the actual use deviates from the VAT deducted upon purchase, the entire VAT amount deducted should be recalculated and over/underpaid VAT should be corrected. In the 4 (or 9 for immovable property) years after that first year, the recalculation must also be made at the end of those years, but for 1/5th (or 1/10th for immovable property) of the VAT deducted.

The European Court of Justice (ECJ) has now decided that this is not in line with EU VAT law. The ECJ states that the recalculations should always be for 1/5th (or 1/10th). So also in the first year of use.

How could this influence you? If a recalculation in the first year leads to an amount of VAT to be paid to the tax authorities, you could refer to the ECJ and only pay 1/5th (or 1/10th) of the amount due. The rest will be paid in later years (if necessary), so this may lead to a significant cash flow advantage!

And what if the recalculation leads to an amount reclaimable? You can then apply the Dutch law as it is now (even though it is not in line with EU law), and deduct the full amount. Any citizen may apply the most beneficial regulation for himself in these situations.

Need to know more? Don’t hesitate to contact us!

VAT - a complicated tax?

Even most tax professionals find VAT one of the most difficult taxes to handle. Franke VAT Specialists  can help you in acknowledging and understanding VAT issues in your organization, streamline the VAT processes and get you in control. Through advice, VAT scans, training, help on implementation projects and/or other forms of support, Franke VAT Specialists will help you to optimize your organization from a VAT perspective!


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