Amsterdam Court rules on sale of car to director at abnormally low price. Tax implications discussed.

• The Court of Appeal in Amsterdam ruled on December 19, 2024 that selling a car by a tax entity to its director at an abnormally low price constitutes an abuse of rights
• The inspector correctly adjusted the tax base in the VAT assessment to reflect an arm’s length transaction
• The appeal of the tax entity was dismissed
• The issue of imposing a penalty for abuse of rights was also discussed
• The director, who is a tax advisor and accountant, bought an Audi RS5 for €48,319 in 2014
• The car needed repairs costing €22,903, which the tax entity claimed back in VAT
• The tax entity then sold the Audi to the director for €15,000 in 2015, claiming it as a dividend payment
• Similar transactions occurred in 2017, 2018, and 2019 with luxury cars
• The Court had to determine whether the ‘unreasonable’ compensation should be corrected for VAT
• The tax entity argued that there were legitimate reasons for the low price, such as the car’s presentation at events and the director’s desire to drive it personally
• The tax entity also cited a subjective tax base for VAT in the Netherlands as a defense against abuse of rights.

Source: fiscaalvanmorgen.nl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.