Dutch Ministry of Finance focuses on VAT planning structures
The Dutch Ministry of Finance completed the investigation into the use of structures by the Financial Sector designed to avoid or minimize VAT. Twenty four internationally operating Dutch financial institutions have been interviewed.
Six of the financial institutions have made use of, or propose(d) to make use of, the following structures:
1. the purchase of services via a non-EU branch of a Dutch entity;
2. the purchase of services via a cost sharing vehicle established in an EU country which has not implemented the cost sharing exemption;
3. the outsourcing of services to a third party with whom the Dutch entity then sets up a special purpose vehicle (spv) which in turn is included in the Dutch entity VAT group.
Such planning structures will be contested by the Dutch tax authorities based on the abuse of rights doctrine. This means that if the commercial reasons to set up a VAT planning structure override the tax reasons, the tax authorities will have no right to challenge such structures.
However, if such structures can't be redefined based on current Dutch VAT legislation, changes to the existing legislation will be considered. Suggestions have already been made. The Dutch fiscal authorities support the proposal by the EU Commission to amend the place of supply rules where these concern the use of a fixed establishment.
Further, the Netherlands urges those EU countries that have not yet implemented the cost-sharing exemption in their VAT legislation to do so as soon as possible.
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