Review refers to "reviewing" VAT deduction. As a business owner, you can deduct VAT to the extent that you purchase a good or service as part of your business, to the extent that it will be used for taxable supplies. For the initial deduction, an estimate is made of the future use and the VAT is deducted on that basis. If it later turns out that the intended use differs from the actual use, then an adjustment must be made.
Revision occurs at different times. In the case of direct commissioning, revision takes place at the end of that year. If the purchase and the taking into use do not take place in the same year, then revision takes place at the time of taking into use as well as at the end of the year of taking into use. In these cases, revision takes place for the entire VAT amount.
Then the goods are followed for a number of years, so to speak, and annual revision can take place. For movable investment goods a revision period of 4 years after the year of commissioning applies, and for immovable goods a revision period of 9 years after the year of commissioning applies. This annual revision takes place in "annual lots," for 1/5 and 1/10 of the input tax, respectively. In these years, there is no revision insofar as the actual use deviates less than 10% from the original destination.
If goods are sold within the review period, then for the remainder of the review period, the use is considered in accordance with the VAT treatment of the supply. If goods are supplied taxed, then for the remainder of the review period the good is considered to have been used 100% for taxed supplies. Conversely, a good is considered to have been used 0% for taxed supplies during the remaining years of the review period when it is supplied exempt. Possibly with major implications for your review.
In the case of immovable property, it is also important that a new revision period can begin after a major renovation. This is the case when a renovation is so extensive that, as it were, a new building is created (fabricated). It is not easy to determine exactly when a new building exists, but certain factors that play a role are: change in architectural construction, change in architectural identity (recognizability), change in function (new homes instead of offices) and the size of the investments, whether or not in relation to the value of the building. If the property is newly manufactured, then a first occupation takes place and the supply of a property within two years of the occupation is subject to VAT and a new review period commences.
It is important to keep in mind that when an immovable property is supplied VAT-taxed by opting for taxed supply, a new review period starts for the customer. If it turns out that the requirements for opting for taxable supply are not met, the supply will still be exempt, possibly with major consequences for the supplier of the property. It is therefore highly recommended that the purchase contract include a clause regulating how such damages can be recovered.
In practice, we often point out the unpleasant consequences that revision can have if it is not taken into account. Especially with valuable matters such as real estate, the amounts involved are often large. Nevertheless, entrepreneurs still frequently encounter this problem. Through this news article, we would therefore like to advise you once again to pay close attention to the revision periods and emphasize how relevant this issue is for entrepreneurs. Do you have questions about revision or other (VAT) issues within your company? Please contact us via your relationship manager, by email at btw@govers.nl, or by phone at 040 - 2 504 504.