6.6.4 Liability rules

The ‘adjustment through taxation’ rules are meant to ensure equal treatment as between a taxable person who applies goods or services for his own private use or for that of his staff and a final consumer who acquires goods or services of the same type,1 as well as a way of adjusting the initial VAT deduction to ensure that goods or services are not consumed free of VAT. This is achieved by taxing the supply, use or disposal of the goods or services for free. As mentioned, the payment of the VAT on these transactions serves as an adjustment of the VAT previously deducted. In my view, this means that only the business that deducted the VAT, i.e. the business that makes the free supply, should be held liable for the VAT on these free supplies.