Summary
On 15 May 2009, the Dutch Supreme Court ruled that all (EU and non-EU) tour operators that are not established or have no fixed establishment in the Netherlands are entitled to a full refund of Dutch input VAT. This means that VAT on for example hotel costs and transport costs can be reclaimed. VAT on these costs incurred in 2008 should be reclaimed before 1 July 2009. VAT on food and drinks cannot be deducted.
Full articleOn 15 May 2009, the Dutch Supreme Court ruled that all (EU and non-EU) tour operators that are not established or have no fixed establishment in the Netherlands are entitled to a full refund of Dutch input VAT. This means that VAT on for example hotel costs and transport costs can be reclaimed. VAT on these costs incurred in 2008 should be reclaimed in time. VAT on food and drinks cannot be deducted.
Background
The European VAT Directive provides for a specific scheme for tour operators: they are considered to provide one single service that is taxable in the country where they are established and, in principle, they are not entitled to deduct input VAT. Tour operators only have to pay VAT on their margin (sales price minus purchase price of a journey).
In the Netherlands, these special rules have not been implemented in local legislation, but provided for in a formal decree (the Dutch 'tour operator scheme’). The Dutch Supreme Court has now ruled that this is not a proper way of implementing the relevant rule provided for in the European VAT Directive. As a result, any tour operator that is not established in the Netherlands can choose to ignore this Dutch scheme and apply the regular rules from the Dutch VAT Act. Under these rules, the holidays sold by foreign established tour operators are not subject to Dutch VAT and the tour operators are entitled to deduct all Dutch input VAT incurred in exercising their business.
Action required before 1 July 2009
We advise foreign established tour operators to file a refund claim for all Dutch input VAT incurred in 2008. The refund request should be submitted to the Dutch tax authorities before 1 July 2009.
With regard to Dutch VAT incurred before 2008, we assume that the Dutch tax authorities will not refund this VAT unless the requests were already submitted and not yet decided. Other refund requests covering years before 2008 can no longer be submitted within the statutory deadline. Therefore, the tax authorities are not obliged to (and probably will not) deal with these requests. They are however discussing this point with the Ministry of Finance. Should they allow recovery of VAT on earlier years we will inform you accordingly.
Source: Dutch Supreme Court, 15 May 2009, nrs. 43561 en 43569.