- Repeal of Existing Policies: The Dutch State Secretary of Finance announced the repeal of two long-standing policy notices regarding the VAT treatment of holding companies effective July 1, 2025, to align with European Court of Justice (ECJ) case law.
- Taxable Person Status: Holding companies will face stricter definitions of taxable person status, with only those involved in policy-determining activities being eligible for inclusion in VAT groups. This now extends to intermediate holding companies, requiring a formal request to the Dutch Tax Authorities (DTA).
- Changes to VAT Recovery Rules: The ability to recover VAT on costs associated with holding shares will be limited; previously approved methods that allowed for full recovery for designated entrepreneurs will be revoked, necessitating adherence to the ‘pre pro rata’ principle based on actual economic activities.
- Cost Allocation for Share Sales: New guidelines will enforce that costs incurred for share transactions must be analyzed for direct attribution, impacting VAT recovery rights. This is a shift from the previous policy where distinctions were made based on the nature of holding companies.
- Proceeds from Share Transactions: Future sales of shares will affect the pro rata calculation for VAT recovery, with proceeds being included unless the sale is considered incidental, raising concerns about the classification of such transactions and their implications for holding companies engaged in investment activities.
Source Deloitte
