A national library organization (”Stakeholder”), is not entitled to fully deduct input VAT as it performs both economic activities and non-economic activities under its legal mandate, and the costs must be split accordingly.
– Stakeholder is a public law entity (ZBO) with specific legal tasks defined in the Higher Education and Research Act (WHW) and the Public Library Facilities Act (WSOB).
– Stekeholder’s legal tasks are fully funded by government subsidies, with some additional revenue from membership fees, sales, and other services.
– Stakeholder’s legal tasks are considered to be performed “as a public authority” and are not considered economic activities.
– Alongside its legal tasks, Stakeholder also performs some economic activities such as selling publications, providing digital memberships, and personnel secondment.
– For these economic activities, Stekeholder is entitled to deduct input VAT, but the deduction must be split between the economic and non-economic activities.
– Stakeholder failed to properly administer the split between economic and non-economic activities, so the court had to determine a reasonable split based on the ratio of taxable revenue to total revenue (including subsidies).
– In 2019, the deductible input VAT is calculated as 0.8% of the total input VAT, based on the ratio of taxable revenue to total revenue.
– In 2020, the deductible input VAT is calculated as 1.1% of the total input VAT, as the total revenue was insufficient to cover the total costs.
– The court ordered the tax authority to provide additional VAT refunds based on these percentages.
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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.
