The Dutch State Secretary of Finance issued on 17 December 2020 a new Decree providing guidance on various topics concerning fixed establishments for Dutch Value Added Tax (VAT) purposes, including:
- The VAT treatment of transactions between a head office and its fixed establishment where either one of them is part of a Dutch VAT group (Dutch view on the Skandia case, section 1).
- The introduction of a ”purchase fixed establishment” (section 2).
- Details on how a service provider may identify which establishment of its customer it provides its services to. This is also relevant for VAT recovery purposes in the financial sector (section 3).
- Determining the entitlement to recover Dutch VAT on costs incurred by a Dutch fixed establishment or head office where these costs partially relate to foreign establishments of a taxpayer, with reference to the Morgan Stanley case (section 4).
- Other topics, including the force of attraction rules (i.e., when does the reverse charge mechanism apply) and the virtual warehousing rules for foreign taxpayers that have a fixed establishment in the Netherlands (in Dutch: niet-plaatsgebonden entrepot).
Source: EY
