Dutch Supreme Court Ruling on VAT Liability for E-Books and Procedural Fairness in Digital Disputes

The Dutch Supreme Court’s judgment of 28 March 2025 (no. 24/01210) addresses a multifaceted VAT issue with both substantive and procedural dimensions. At the heart of the dispute is the sale of e-books by a sole proprietor through a digital platform, raising questions about whether he acted as a reseller or merely as an intermediary. This distinction is decisive for determining VAT liability in the Netherlands. Simultaneously, the case explores the procedural limits of the right to be heard under EU law, particularly where tax authorities rely on late-disclosed evidence. The ruling brings clarity to the VAT treatment of digital supplies and the reach of fundamental rights in tax proceedings.

Facts and background

The taxpayer operated an online platform offering e-books for download to consumers primarily located in the Netherlands. The digital content was supplied by non-EU entities, and the taxpayer claimed to act merely as a conduit between those foreign publishers and end consumers. He maintained that his role was limited to facilitating the transaction on behalf of the actual suppliers, who remained legally and economically responsible for the content. Customers paid via the website, which also handled logistics and communication, including purchase confirmations, download links, and support – all under the branding and name of the taxpayer’s business. Crucially, payments were processed through the taxpayer’s own bank accounts or payment service providers, and at no point were customers informed that the e-books originated from third parties. All communication, including automated emails and invoices, identified the taxpayer as the apparent seller.

On this basis, he argued that the supplies did not occur in the Netherlands and were therefore not subject to Dutch VAT. He reported no output VAT and applied no reduced rates. However, the Dutch Tax Authorities, relying in part on evidence gathered through a parallel criminal investigation (including intercepted communications and financial records), concluded that the taxpayer was in fact a reseller - delivering digital services directly to consumers in his own name and for his own account. In their view, he bore the commercial risk, controlled the customer interface, and had failed to clearly disclose that he was acting on behalf of non-EU suppliers. Accordingly, they imposed a retrospective VAT assessment at the general rate for the periods in question.

The taxpayer challenged the assessment, arguing both that he acted as an intermediary and, in the alternative, that the reduced VAT rate applicable to books should extend to e-books. He also objected to the late submission of crucial documents during the appeal process, which he claimed undermined his defense and violated his procedural rights under EU law.

Parties’ positions

The taxpayer contended that his role was limited to mediation between non-EU suppliers and EU consumers, which would place the transaction outside the Dutch VAT scope. Alternatively, he argued that e-books should be treated equivalently to printed books and taxed at the reduced rate. Lastly, he alleged a breach of the EU right to be heard, since the tax authority failed to disclose all relevant documents in due time, thereby impairing his procedural rights.

In contrast, the tax authorities asserted that the taxpayer operated as the actual supplier. They pointed to economic indicators: he controlled the commercial aspects of the transaction, processed payments, and served as the customer’s point of contact. These digital supplies, they maintained, were electronic services rendered to Dutch consumers and therefore subject to VAT in the Netherlands at the standard rate. On the procedural matter, they acknowledged the delay in disclosure but denied that it had caused any real disadvantage.

Legal framework and case law

Place of supply for electronically supplied services

The classification of digital transactions under VAT law begins with determining the place of supply. Article 58 of the VAT Directive 2006/112/EC (implemented in Dutch law via Article 6h of the Wet op de omzetbelasting 1968) establishes that electronically supplied services to non-taxable EU persons are deemed to be supplied at the place where the customer is established or resides. If the taxpayer is the supplier, the VAT is due in the Netherlands.

This rule is designed to prevent distortions in the digital economy and to ensure VAT is paid where consumption occurs. However, identifying the supplier requires an assessment of both contractual and economic reality.

Supplier or intermediary?

EU case law underscores that the nature of the transaction must be assessed based on substance over form. In Tolsma (C-16/93), the ECJ established that a taxable transaction requires a direct link between a service and its consideration. More relevantly, in WebMindLicenses (C-419/14), the Court emphasized that formal agreements may not reflect the economic substance of a transaction. A person who sets the terms of supply, handles payments, and is responsible to the consumer may, in substance, be the supplier.

The presumption of supplier status for online platforms is codified in Article 9a of Implementing Regulation (EU) No. 282/2011. Under this provision, a taxable person who authorizes the charge, sets general terms, and provides access to downloads is presumed to be the supplier – unless it is clearly stated that another party is the supplier and this is made known to both customer and content provider. This creates a rebuttable presumption that puts the burden of proof on the platform operator.

In the present case, the taxpayer had integrated payment and customer service into his platform, and his identity appeared throughout the customer journey. These factors strongly point toward supplier status under the regulation and the ECJ’s jurisprudence.

VAT date on digital publications

Historically, the application of reduced VAT rates to books was limited to physical copies under Annex III of the VAT Directive. Directive 2018/1713/EU amended this framework, allowing Member States to apply the reduced rate to digital publications. However, implementation was discretionary. The Netherlands did not extend the reduced VAT rate to e-books during the tax periods in question. Consequently, under Dutch law, electronic supplies of books were subject to the standard rate of 21%.

Although arguments based on fiscal neutrality – suggesting similar treatment for similar products – have surfaced in EU litigation (e.g., EC v. France and Luxembourg), these are only persuasive where national implementation violates directly effective EU rights. That was not the case here.

The right to be heard

The right to be heard is a fundamental principle of EU law, enshrined in Article 41(2) of the Charter of Fundamental Rights of the European Union. This right ensures that individuals can examine the evidence on which an adverse administrative decision is based and respond before it is finalized. The ECJ has affirmed this in Sopropé (C-349/07), which held that the right applies even in the absence of explicit national legislation.

The Kamino (C-129/13) judgment confirmed its relevance in tax and customs matters. However, the ECJ has also held that not every violation of this right leads automatically to nullity. Rather, national courts must determine whether the breach had a concrete impact on the outcome of the decision or the fairness of the procedure.

Judgment of the Supreme Court

The Dutch Supreme Court ruled that the lower court had incorrectly annulled the tax assessment solely due to a breach of the right to be heard. The Court acknowledged that the right is indeed a binding procedural safeguard under EU law and applicable to national tax procedures. However, the Court reiterated that its violation does not ipso iure lead to annulment of the resulting decision.

Instead, the Supreme Court adopted a proportionality-based approach, aligned with EU case law, requiring a concrete assessment of whether the procedural breach had materially affected the taxpayer’s ability to mount a defense. The Court emphasized that nullification of a tax assessment is only warranted if the breach undermined the taxpayer’s position in a real and non-theoretical manner. For example, had the taxpayer received the documents earlier, would he have introduced different evidence or legal arguments that might reasonably have altered the outcome?

Because the lower court had failed to carry out such an analysis, the Supreme Court overturned its decision and referred the case back to a different Court of Appeal. This appellate court must now not only re-examine the procedural question in light of the proportionality test, but also address the substantive VAT issues – namely, whether the taxpayer was indeed the supplier and whether the standard VAT rate was rightly applied.

This decision affirms that national courts must balance procedural fairness with the functional integrity of tax enforcement. It rejects a formalistic view of procedural rights and replaces it with a contextual inquiry into actual prejudice.

Conclusion

This ruling from the Dutch Supreme Court provides guidance for practitioners and businesses operating in the digital economy. It underscores that digital entrepreneurs cannot shield themselves from VAT liability by invoking formal contractual constructs if economic reality points to supplier status. Payment processing, platform control, and customer interaction are decisive factors in this assessment.

Equally, the decision reaffirms the importance – but also the limits – of procedural rights in tax law. While the right to be heard is a cornerstone of fair administration, it is not an automatic escape clause. Taxpayers must demonstrate actual harm to prevail on procedural grounds.

As digital commerce continues to evolve, this judgment offers a robust framework for navigating the intersection of VAT law, technological innovation, and procedural justice

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