In 2002, the Supreme Court ruled that a private person owning his own company was himself also a taxable person where he obtains a salary or management fee from that company. Many such private persons were registered for VAT. Because of EU case law, these persons could since 2005 benefit from a 100% input VAT deduction where they invested in assets partly used for their business, while no corresponding liability for private use existed. This was eventually introduced in 2007, but before VAT could be declared on the private use, the EU court decided that the Supreme Court was wrong all along. This prompted the Ministry of Finance to instruct the tax service to impose VAT on the assumed "termination of business" of the private persons, or to reclaim all input VAT. Lenos claims that the principle of legitimate expectation prohibits any such action, which was adopted by the Haarlem District Court and the Amsterdam High Court. The Ministry of Finance has referred the matter to the Supreme Court.
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