A unique tax position for municipalities
The tax position of municipalities is unique with respect to VAT and real property transfer tax. In addition to the normal VAT system that applies for businesses, (Dutch) municipalities can make use of the (Dutch) “VAT Compensation Fund” for deducting VAT on expenses (input tax) that are incurred in the administrative sphere. Municipalities also engage in transactions in the commercial sphere, including VAT-exempt transactions, so the input tax of municipalities must be divided into different categories. We have many years of experience with these issues and provide advice to municipalities, joint schemes and partnerships of municipalities. For example, our knowledge of municipalities and of (development of real property by) commercial parties is combined in construction projects realised by municipalities.