Partial sale of a horse to an EU entrepreneur: Pay Attention to VAT

In the equestrian world, it is quite common for someone to sell a share in the ownership of a horse, for example 50 percent, to an investor. The horse remains in the Netherlands, but the new owner gains partial control. This is important for VAT purposes because such a partial sale is usually considered a supply of goods rather than a service. The Court of Justice has ruled that two different owners can both have the right to act as owners of the horse.

Why is this a supply of goods for VAT purposes? 

According to VAT rules, a supply of goods occurs when the right to act as owner (the right of disposal) is transferred. If you sell 50 percent of a horse, you are transferring part of that right to the buyer. Even if the horse physically remains in the Netherlands or another EU member state, this can still be considered a supply. The court has ruled that shared decision-making authority also qualifies as the right of disposal.

In some cases, it may still be considered a service. For example, if the buyer has no influence over the use, training, or management of the horse. In that case, the investment resembles a financial participation, which has different VAT consequences.

Transport Determines the VAT Rate 

Are you selling part of a horse to a business in another EU member state? Then you must check whether the horse is actually transported to that member state. Only in that case can you apply the zero percent VAT rate for an intra-community supply.

In practice, this often goes wrong. The horse stays in the Netherlands, for example for training or competitions, while the seller still applies the zero percent rate. That is not allowed without actual transport to another country.

Four VAT Considerations When Selling (Part of) a Horse

1. It’s usually a supply of goods, not a service.
2. Transport to another EU member state is required for the zero percent rate.
3. The burden of proof always lies with you as the seller. 
4. Have your VAT position assessed in advance.

Want to know more? 

At aaff, we’re well-versed in the equestrian sector. We’re happy to help you avoid VAT risks and seize opportunities. Contact our  specialist and together we will make sure your horse and your VAT are well taken care of.