Improper denial of the right to deduct VAT on expenses incurred for the accommodation of workers delegated to the Netherlands
Sometimes the tax authorities in the Netherlands refuse to deduct (reimburse) VAT for the accommodation of posted employees, although in some cases the taxpayer is entitled to deduct VAT added to the employer’s expenses for the rental of accommodation for posted employees. However, one of our clients faced a refusal to exercise the right to such a deduction.
We effectively represented the principal’s interests
We conducted tax proceedings on behalf of our client, as a result of which our principal’s right to deduct VAT on expenses incurred for renting accommodation for delegated employees was acknowledged. According to the jurisprudence of administrative courts, the right to such a deduction is granted if there occur so-called special circumstances. In the case at hand, our client posted employees from various EU countries to its contractors. The employees were delegated to the Netherlands to carry out certain projects of a temporary nature. Subsequently, these workers were posted to other locations in order to carry out further assignments. The workers were often accommodated in holiday resorts, hotels etc., costs of which were borne by the delegating party. On behalf of our client, we referred to a case law, although concerning Dutch employers in relation to the same problem. In this ruling, the administrative court acknowledged that such “special circumstances” exist if the employer’s benefit is not of a consumptive nature. As a result, our principal recovered the VAT it had paid. The possibility of recovering VAT goes back five years.
