Netherlands: Incorrect application of the reverse charge does not lead to VAT being charged

Gelderland District Court ruled that X bv does not owe VAT on the basis of art. 23 Wet OB 1968. In that case, the inspector cannot make additional assessments. X bv has never been the owner of the goods.

In May 2016, X bv concluded an agreement with a Chinese company about the import and transport of the goods of the Chinese company in the EU. In 2005, a decision was issued to X bv for the application of the reverse charge mechanism for imports ex art. 23 Law OB 1968. As a result, as of 22 August 2005, customs no longer levies VAT on the import of goods destined for X bv. The decision will be withdrawn in December 2016. Because X, for example, does not declare the VAT owed in connection with the import of goods from the Chinese company, the inspector imposes an additional VAT assessment.

Gelderland District Court ruled that X bv does not owe VAT on the basis of art. 23 Wet OB 1968. In that case, the inspector cannot make additional assessments from her. According to the court, X bv never owned the goods. Because it only mediated with the customs and logistics services, the goods are not destined for X bv and the reverse charge mechanism does not apply to import. Furthermore, the court notes that the statement of the inspector that X bv owes VAT because it incorrectly stated that it can apply the reverse charge mechanism, and that it therefore provided incorrect information, must be rejected. The VAT levy then arises from art. 22 Wet OB 1968 and therefore not from art. 23 Law OB 1968. The turnover tax payable on the basis of Article 22 of the Dutch Taxonomy Act 1968 is levied by sending an invitation to payment stated on an assessment notice, not by establishing an additional assessment for turnover tax. The court quashes the additional assessment.

Source – taxlive.nl