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NETHERLANDS: VAT is immediately due by Netherlands BV on 10-years finders fee regarding image rights of professional football player

The Court of Appeal of Amsterdam decided that regarding a finder?s fee relating to the image rights of a professional football player the VAT on the entire compensation was immediately due (decision of 20 December 2004, No. 03/03657). The facts were as follows: the taxpayer BV X was established in 1993 and was inter alia active in the filed of advising and supporting professional football clubs regarding the hiring and selection of players with a view to concluding labour agreements and or transfer of an unlimited or limited time. The BV is as such an entrepreneur for the application of the Netherlands VAT legislation. On 8 April 1997 the shares in the BV have been sold to a resident of Italy. On 27 June 1997 an agreement regarding the exploitation of the image right of a football player was concluded between a client of the BV and a company that was resident on Jersey. The remuneration for the BV amounted to 10 yearly payments of NLG 250,000 each. The BV invoiced the Jersey company on 30 June 1997 for an amount of NLG 250,000, increased with 19% VAT (or NLG 43,750). Around the time of this transaction the first shareholder of the BV emigrated from the Netherlands. The Court mentions many different elements relating to this emigration, which was apparently possibly only of a temporary nature. In 2002 the Netherlands tax authorities took the view that the services of the BV regarding the image rights took only place around the signing of the agreement between the client of the BV and the company residing on Jersey. Therefore the tax authorities were of the opinion that VAT should have been charged on the entire finders fee, and not on each of the 10-yearly instalments. The BV did not agree, and the parties went to the Court of Appeal of Amsterdam. The Court dealt with several issues (amongst which the formal issue of which inspector was competent for the BV and the country of residence of the shareholder of the BV). On the issue, the Court of Appeal decided in favour of the tax authorities, but cancelled the fine (of 25% of the VAT due) which the tax authorities had imposed.
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Prof. Guglielmo Maisto
Maisto e Associati, Milano

Dr. Dick Molenaar
All Arts Tax Advisors, Rotterdam

 

Mr. Kevin Offer
Hardwick & Morris LLP, London

Mr. Mario Tenore
Maisto e Associati, Milano

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