News item | 2023-04-20 | 12:14
Institutions for debt assistance and social work with and without a profit motive remain exempt from VAT. According to a ruling by the Supreme Court on Friday 14 April, the exemption is formulated too broadly and is contrary to the law, as a result of which commercial institutions would owe 21% VAT. The government wants to prevent this. That’s why one is happening today policy decision into force, which means that social-cultural institutions that aim to make a profit may also continue to apply the exemption.
Institutions that offer supplies and services of a social and cultural nature do not have to pay VAT in the Netherlands if they do not intend to make a profit. However, some institutions that fall under this exemption are allowed to make a profit, such as institutions for social work and debt counseling.
Supreme Court ruling
On Friday, April 14, 2023, the Supreme Court ruled that the measure that ensures that certain institutions are allowed to have a profit motive is incorrect. As a result, all these institutions would now have to pay 21% VAT on their activities. This could have major consequences for these institutions. The government does not consider this desirable. That is why, as of today, a policy decision will come into effect that stipulates that designated profit-seeking institutions will remain exempt from VAT. It also stipulates that the past will not be revisited.
The government will also examine whether the Turnover Tax Act 1968 needs to be amended accordingly. The policy decision will remain in effect until a permanent solution to this problem is found.