The Dutch Supreme Court recently issued a ruling regarding the VAT reverse charge mechanism. The reverse charge mechanism shifts the responsibility for paying VAT from the supplier to the buyer. However, a recent court case found a flaw in the process. The case involved a Dutch entrepreneur who sold metals to a German entrepreneur. The Dutch entrepreneur invoiced the sale with the reverse charge mechanism, but the customer’s VAT number was invalid. The Dutch tax authorities concluded that the customer was not the actual customer and therefore the reverse charge couldn’t apply. The Supreme Court ruled that valid customer details are now a prerequisite for applying the reverse charge mechanism effectively.
Source VATit
