Settlements and VAT in Business Disputes

Questioner

We reached a settlement after a hearing in a business dispute. The settlement stipulates that party A must pay a settlement amount to party B. It states that party A must pay an amount x excluding VAT to party B. Only the stated amount needs to be paid, right? Isn't VAT not payable on a settlement amount? Or can it be reclaimed? I believe that's only possible if the VAT amount is also listed separately. But it's not. And I believe no VAT is charged on settlements, is that correct?

Questioner

In general, if a settlement is reached between business parties that requires party A to pay, for example, €1,000 excluding VAT to party B, then party A must pay (assuming the higher VAT) €1,210 to party B. The VAT amount can then simply be reclaimed and party B must also declare that amount in its VAT return as VAT received.

Questioner

I agree with Mr Martens.