7.10 Deduction and the use of goods and services for activities which are absolutely forbidden

An operator of a bar supplies drinks and food, but also (soft) narcotic drugs. The supply of drinks and food is VAT taxable and the supply of (soft) narcotic drugs is outside the scope of VAT.

According to decision of the Supreme Court, the operator of the coffee shop qualifies as a taxable person for all his activities, including the sale of soft drugs, although the supply of soft drug is an absolutely forbidden activity and thus falls outside the scope of VAT. All costs which are not directly and immediately related to the supply of food and drinks or the supply of soft drugs, qualify as overheads. The VAT on these costs is deductible on a pro rata basis.

There are no specific rules or jurisprudence regarding the deduction of input VAT related to absolutely forbidden activities.

There are no specific rules or jurisprudence regarding the deduction of input VAT related to absolutely forbidden activities.

There are no specific rules or jurisprudence regarding the deduction of input VAT related to absolutely forbidden activities.