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self-employed vat deduction

Self-employed VAT deduction

1 augustus 2017 - Bas -

Doing business as an independent entrepreneur: in many countries a more and more common feat. I’m one of them. And it seems that especially here in the Netherlands, the number of ‘zzp-ers’ (the self-employed entrepreneurs without personnel) is growing rapidly. We’re almost with 1 million now, if we believe the statistical office.

And we all want the same: do our job! As good and as efficient as possible, with the flexibility and room for creativity that the self-employment status gives us. So if I order a book about VAT, I want it delivered immediately, so that I can continue working.

But what is often forgotten, is that doing business is more than networking, making a website and start selling goods or services. It is also important to think about tax. Preferably VAT, because that is the type of tax that a business has to deal with every day.

Many businesses start-off well, and get a registration with the tax office. They invoice their customers and submit their first VAT Return. But after that, business is booming, and the administration gets less important.

This also happened to a Romanian entrepreneur, who started his own courier business. After 6 months, he stopped filing VAT Returns. The tax authorities assumed that he stopped his business again, and closed his VAT registration.

But he hadn’t stopped! Perhaps he was delivering so many packages that he did not have time to submit a VAT Return, but he did issue invoices with VAT to his customers. Also after the tax authorities deregistered him. At least for a while, because after several months, he stopped charging VAT as well. He did not stop issuing invoices, though.

When the tax authorities found this out, they raised an assessment, and collected all the VAT that he charged, and should have charged. With interest. OK, that seems fair enough. But the courier, however, did not want to give up so easily, and asked for a refund of the VAT on all his costs in the period that he was deregistered. The tax authorities denied that request.

The question is if that is justified. Long story short: Wouldn’t it be fair that the courier can claim back the input VAT over the same period for which he received an assessment for output VAT?

The European Court of Justice will answer that question. Probably including the considerations that VAT should be neutral, but countries can take measures to counter fraud, and that it is up to the local court to decide if in the current case there is a justification or not for such measures. When the ECJ decides, I’ll let you know.

The more important question remains: why is my book not yet delivered? Another case of a non-registered courier? Or should I just order the e-book next time?

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