- A Dutch court has ruled that a private equity fund cannot recover VAT on transaction costs related to the acquisition of a Dutch company.
- The fund set up a limited partnership which procured advisory and lawyer services for the acquisition.
- The partnership sought to recover input VAT on the transaction costs, but the Dutch tax authorities denied the claim.
- The court confirmed that the partnership was not an entrepreneur for VAT purposes and could not deduct any VAT on the incurred transaction costs.
- This ruling highlights that VAT recovery during M&A transactions may not always be feasible, as non-economic activities can restrict the right to recover VAT.
Source DLA Piper
