Why This Case Matters for Entrepreneurs
Too often, founders and owners of micro and small companies set up a structure—think BV on top of BV, certificates instead of shares, management services done "gratis", without understanding what these moves mean in the eyes of the tax authorities. It feels smart, lean, and convenient, until the tax inspector knocks.
The Arnhem-Leeuwarden Court of Appeal just made that knock loud and clear: holding certificates is not enough to create a fiscal unit for VAT purposes. And if you're not charging for services, don’t expect to reclaim VAT. This isn’t just a technical ruling; it’s a structural warning to entrepreneurs who mistake ownership for entitlement.
The Heart of the Case
A private limited company (BV1) was set up to raise funds by issuing certificates. It used that money to acquire certificates in another BV (BV2) and provided it a loan. No management fee. No invoices. Just interest.
BV1 then tried to form a fiscal VAT unit with BV2 and a third company. The tax inspector said: no way, and the court agreed. Why?
Because:
- Certificates ≠ control. Holding certificates without voting rights means you don’t hold the reins. You’re a passive investor.
- Control = key for forming a VAT fiscal unit. If the hands that manage and the hands that profit aren’t the same, there's no “financial entanglement.” That’s a dealbreaker.
- Free services don’t count. Management without invoicing? That’s not taxable. And if you’re not doing something taxable, you don’t get to deduct input VAT.
The company also granted loans, which are VAT-exempt. So in 2018, it did... nothing that counts in VAT terms. No taxable services = no VAT refund.
Three Hard Lessons for Small Business Owners
-
Certificates are a financial instrument—not a control mechanism.
If your holding structure is built on certificates alone, you're not "one entity" in the eyes of the tax office. You're just a fragmented cluster of liabilities. -
Free services cost you more than you think.
Doing work for “free” inside your own group might feel flexible, but it kills your right to deduct VAT. If you don't charge, you can't reclaim. -
Tax strategy is not the same as business logic.
Being economically clever doesn’t make your structure legally robust. Your fiscal unity must be visible, provable, and active. If it’s only paper-deep, it’s paper-thin.
A Word from the Ledger
At XTROVERSO, we don’t romanticize complexity. We translate it into consequences.
This ruling confirms what we've been warning our clients about: compliance is not a formality, it's a filter. It separates what you think you're building from what actually stands when challenged.
When you operate a micro or small business, your VAT recovery, cash planning, and group logic are deeply connected. There is no room for “implied control” or “intuitive service contribution.” Either your structure is clean, auditable, and billable, or it’s vulnerable.
Final Thought
If your company setup includes layered BVs, internal loans, unbilled services, or certificate holdings, stop. Before the inspector does.
Ask yourself: Is your VAT strategy visible from the outside? Or are you assuming that what you meant to do will be enough?
If you don’t know the answer, let’s talk. Because the tax office won’t wait for your intentions to catch up with your paperwork.
Co-Founder of Xtroverso | Head of Ledger and Tax Compliance
Linda Pavan brings disciplined precision to Xtroverso, anchoring its financial, fiscal, and operational integrity. As a ZENTRIQ™ Certified Auditor, she translates complexity into clarity—ensuring every decision is traceable, compliant, and strategically sound. Her quiet rigor empowers businesses to act with confidence and accountability.
Case Reference: Arnhem-Leeuwarden Court of Appeal, June 3, 2025 — ECLI:NL:GHARL:2025:3429
