In the final value added tax (VAT) return for 2018, a VAT correction may be needed to reflect:
The VAT deduction exclusion decree precludes the recovery of VAT (also referred to as input VAT) on promotional gifts and staff benefits if they were provided free of charge or below cost by the business (whether or not there was a commercial reason for providing the gifts and staff benefits). The rationale for not allowing input VAT to be recovered is that these costs—while business-related—are consumption-oriented. VAT is a tax specifically designed to tax consumption.
A threshold of €227 per recipient applies. It is not necessary to make a deduction exclusion decree adjustment if the total purchase and development costs (the cost price) of the benefits are less than €227 (excluding VAT) per annum, per recipient. This is a final threshold. If the threshold amount is exceeded, the input VAT on provisions within the threshold amount would be non-recoverable.
Read a January 2019 report prepared by the KPMG member firm in the Netherlands
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.