7.7 VAT and barters between a taxable person and a non-taxable person

So far, I mainly focussed on barter transactions between two taxable persons. I’ve come to the conclusion that in those cases, in my view, each taxable person makes a taxable supply of goods or services for consideration and that parties (implicitly) agree that the considerations are settled. I will now examine whether the solutions for determining the taxable amount that I presented earlier also apply to barter transactions between a taxable person and a non-taxable person.

The only party to this type of barter transaction that is affected by the VAT consequences of the transaction is the taxable person. In my view, the supply of a good or service cannot also be considered a payment for a supply. This also holds in this scenario, since there is no conceptual difference between paying for a supply by a taxable person and a supply by a non-taxable person. Therefore, in my view, the supplier and the recipient should still either agree on a price or use the ‘normal value’ as a taxable amount for the transaction.

Because the taxable business purchases a good or service from a non-taxable person, the supply made by that non-taxable person is not subject to VAT. Therefore, no VAT can be deducted by the taxable business. Therefore, determining a deductible amount for the transaction made by the natural person is irrelevant/does not apply.1