VAT – time for assessing the requirement of business activity

Supreme Court judgment 14 September 2020, HR-2020-1777-A, (case no. 19-154777SIV-HRET).

ANG AS (Counsel Torgeir Fjeldskaar) v. The state represented by the Tax Office (The Office of the Attorney General represented by Asgeir Nygård)

Justice: Indreberg, Falkanger, Noer, Ringnes, Arntzen

A company whose activities were to include boat rental, bought a boat in 2007, sold it and bought a new boat in 2010. The tax office reversed deducted input VAT relating to the purchase and operation of the new boat, arguing that the boat was not part of a business, see section 2-1 of the VAT Act, as this part of the activities was unlikely to generate a profit. The question in the Supreme Court was which point in time should count in the assessment of the likelihood of the boat rental generating a profit. The Supreme Court found like the previous instances that it had to be the time of acquisition of the new boat in 2010, and not the time of the start-up of the activities in 2007. The system of the VAT Act indicated this solution, which was also compatible with strong policy considerations. The appeal against the Court of Appeal's judgment, which dismissed the appeal against the District Court's judgment in favour the Tax Office, was dismissed.

Read the whole judgment (Norwegian only)

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