In our tax practice we notice that not all (holding) companies are aware of the Dutch VAT rules regarding the place of service and the consequences thereof.
A mere holding company is in general not considered a VAT-entrepreneur. However, based on the Dutch VAT rule, a pure holding company can be obliged to pay VAT. This is the case when the services supplied qualify as:
- the assignment and/or granting of copyrights, patents, licensing rights, trademarks and other similar rights;
- advertising services;
- services supplied by consulting persons (engineers, consultancy agencies, lawyers, accountants), other similar services and/or information processing and information disclosure;
- the obligation to entirely or partly not engage in a professional activity or a in this enumeration mentioned right;
- bank, financial and insurance transactions, except for the lease of safe-deposit boxes;
- the assignment of personnel; or
- the rental of movable property (exclusive rental of transport).
If the supplied services qualify as one of the aforementioned services, these are deemed to be performed in the country of the holding company. It is the responsibility of the holding company to assess whether this is the case. The holding company will then have to register itself for VAT purposes. As a consequence, the holding company will receive a VAT registration. After the registration the holding company has to include in its own VAT return a 'deemed' input-VAT under the so called reverse charge mechanism. The holding company is not allowed to deduct the input VAT, since it does not perform VAT taxable activities.