Fictitious supplies
The VAT due on deemed supplies
The most important VAT correction besides the ’BUA’ is the levy of VAT on so-called 'fictitious supplies'. This correction comes into effect (in certain cases) if the relevant supplies are not covered by the ‘BUA’. If the ‘BUA’ formally applies, but no correction is made because the 227 euro limit has not been exceeded, a correction for a fictitious supply does not apply.
A situation in which the ‘BUA’ does not apply but a correction must be made by levying VAT on fictitious supplies is, for example, the situation in which the entrepreneur uses his business goods privately, while the input tax on these goods has been fully or partially deducted. In addition, a correction of VAT is required for business gifts or donations ('goods provided free of charge') that do not fall under the ‘BUA’, for example because the recipient, as a business owner, could have fully deducted the VAT when purchasing the goods.
Furthermore, a number of situations are conceivable in which private use occurs without the application of the ‘BUA’, including the private use of a company car. In all of these cases, the entrepreneur must make a correction to the deducted VAT by some other means. In certain cases, as noted above, this is done by charging VAT on the free supply (the fictitious supply).
It is assumed that a fictitious supply cannot still be made if a deduction on an item provided to a staff member is maintained due to special circumstances, given the needs of the employer's business.
Refraining from levying tax
VAT on fictitious supplies is not charged if the supply of samples or gifts of a low value is for free (the purchase price of the gifts must be less than 15 euro each).
Case law shows that the levy on a fictitious supply can only be applied if there is consumption or consumption-related extraction by a natural person. Legal entities have no 'own' consumption in this context, but can make their business assets available to natural persons for private use.
It is also important that the correction may be calculated on a time proportion basis if the private use has only taken place during part of the year. In principle, the VAT on the fictitious supplies must be processed in the last VAT return of the book year.
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