The CJEU has decided that the Dutch tax authority cannot collect VAT arising on an \”upstream\” adjustment other than from the taxpayer who reclaimed the VAT in the first place.
The case of Pactor Vastgoed concerned an adjustment that arose because Pactor Vastgoed used a property it had acquired (as a taxable supply by virtue of the Dutch \”option to tax\”) to make exempt supplies (initially letting the building and later selling it).
Since the Dutch option to tax rules require a building subject to the option to be used for activities that allow all, or almost all, of the VAT on the supply of it to be reclaimed, the exempt use of the building meant that the option to tax the supply to Pactor Vastgoed was disapplied.
In turn, this meant that the supplier concerned made an exempt supply and hence that its input VAT recovery was restricted.
The Dutch tax authority raised an assessment against Pactor Vastgoed to collect the \”upstream\” adjustment that resulted from the use that Pactor Vastgoed made of the property.
The CJEU has now agreed with the A-G in the case that EU law \”… must be interpreted as precluding the recovery of amounts due following the adjustment of a value added tax deduction from a taxable person other than the person who applied that deduction.\”