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  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 6/1/2013

Netherlands: VAT essentials 

Essential information regarding VAT as it applies in Netherlands.


Scope and Rates

What supplies are liable to VAT?


Value-added tax (VAT) is due on any supply of goods or services made in the Netherlands, where it is a taxable supply made by a taxable person in the course or furtherance of a business carried on by said person.


Supply includes all forms of supply. It is not restricted to the provision of goods and services by way of sale but can equally apply to other forms of transaction.


Supply does not include anything done otherwise than for a consideration. However, certain transactions are not subject to Dutch VAT, for example supplies within a VAT group or a sale of a business as a going concern. Furthermore some transactions are deemed to trigger a supply (such as the application of self-produced or constructed goods by a (partly) exempt VAT entrepreneur).


What is the standard rate of VAT?


The standard rate of VAT is 21 percent.


Are there any reduced rates, zero rates, or exemptions?


Yes. There is a reduced rate of six percent for the supply of certain goods and services, including:


  • food and non-alcoholic drinks
  • books, newspapers, and journals on paper (not in digital form)
  • water supplies
  • medicines and aids for the handicapped
  • passenger transport
  • hotel and camping accommodation
  • admission to e.g. circuses, zoos, public museums, cinemas etc.
  • agricultural product/services
  • some labor-intensive services.

The list of exemptions includes:


  • exemptions with input tax recovery (zero rate supplies)

    • export supplies
    • supply of goods within a VAT warehouse
    • services regarding goods that are not yet imported

  • Exemptions with no input tax recovery (exempt supplies)


    • financial, banking, and insurance services
    • health and welfare
    • certain cultural activities
    • education
    • supplies by non-profit institutions on the condition that no distortion of competition will occur as a result of the exemption
    • certain games of chance
    • certain postal services
    • non-commercial activities of public radio and television broadcasting organizations
    • land (certain transactions are automatically taxable with VAT and there is an option to tax land transactions in case certain requirements are met).

What are the other local indirect taxes beside VAT?


Other indirect taxes and taxes that may interact with VAT in the Netherlands are for example:


  • gambling tax
  • import duties
  • export duties
  • excise (e.g. on alcohol, tobacco and use tax on non-alcoholic beverages)
  • tax on motorcars and motorcycles
  • real estate transfer tax
  • insurance premium tax
  • environmental taxes (e.g. coal tax, energy tax).

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Registration

Who is required to register for Dutch VAT?


Dutch Entities


If a business makes taxable supplies in the Netherlands for which it must account for the VAT due, intra-Community supplies, intra-Community acquisitions, or export supplies, it will be required to register. No VAT registration threshold exists in the Netherlands.


Non-Dutch Entities


The registration rules that apply to Dutch entities also apply to foreign entities that are making taxable supplies in the Netherlands. To deal with its VAT affairs an overseas business may appoint a VAT representative with joint and several liabilities, or a VAT agent with no liability.


If a business is not registered for VAT in the Netherlands but sells and delivers goods from abroad to customers in the Netherlands who are not VAT registered (distance sales), where the value of those sales exceeds a threshold of EUR100,000 it is required to register and account for Dutch VAT.


If a business is established outside the European Union and renders electronically supplied services to customers in the Netherlands who are not VAT registered, then the place of supply is in principle the Netherlands. Business will then have to register for VAT in the Netherlands. If, however, it supplies the same services to customers in other EU Member States it can opt to register for VAT in one EU Member State rather than all of them in case certain requirements are met. In this case it still have to account for VAT on supplies at the rate prevailing in the country of the customer but must only deal with one EU Member State for filing and payment purposes.


Are there penalties for not registering or late registration?


There are no penalties for failing to register for VAT promptly. However, business may incur late payment penalties and interest on any outstanding VAT.


Is voluntary VAT registration possible for an overseas company?


No.


Are there any simplifications that could avoid the need for an overseas company to register for VAT?


If a business makes supplies of goods or services in the Netherlands for which it has to account for the VAT due, then it is required to register. However, it is possible to avoid registering and accounting for Dutch VAT when making certain supplies.


In the following examples the obligation to account for the VAT due can be shifted to the customer provided that he is registered for Dutch VAT.


Triangulation


If a business is an intermediate supplier to a Dutch buyer of goods purchased from a business in an EU Member State other than your own and the Netherlands and the goods are delivered from there to the Netherlands, VAT due should be accounted for by the Dutch customer and no intra-Community acquisition has to be accounted for in the Netherlands by the intermediate supplier.


Call-Off Stock


When a business stores stock from another EU Member State at its customer's premises or at premises under the customer’s control in the Netherlands a simplification can be applied if the supplier is not registered for VAT purposes in the Netherlands. Instead of reporting a deemed intra-Community acquisition followed by a local supply, the supplier and customer can account for an intra-Community transaction at the moment that the goods are actually sold.


Consignment Stock


When a business stores stock in consignment in the Netherlands, the eventual supply to the consignee is treated as an intra-Community supply (if the goods are transported to the consignee from another EU Member State) and the consignee accounts for VAT on the supply as an acquisition.


Reverse Charge


If a business is not established in the Netherlands and supplies goods/services taxable with VAT to a VAT-entrepreneur or a legal entity established in the Netherlands, the reverse charge mechanism is applicable. The Dutch company/legal entity then has to account for the VAT due.


As of 1 April 2013 a voluntary reverse charge mechanism applies for supplies of mobile phones, tablet, laptops, game consoles and computer chips exceeding an invoice or order value of EUR10,000.


Bear in mind that these provisions are subject to particular requirements.


Does an overseas company need to appoint a fiscal representative?


No, unless it concerns VAT due on distance sales and the company is established in a country with which the Netherlands does not have a similar agreement as mentioned in article 204 of the EU VAT Directive. A fiscal representative is also required if the company wants to make use of the VAT deferment scheme on importation (article 23 license), special VAT zero rates like for supplies of goods in an excise warehouse, VAT warehouse or a customs warehouse.

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VAT grouping

Is VAT grouping possible?


Yes. VAT grouping is possible if there are financial, economic and organizational links between VAT entrepreneurs. The tax authorities may also instruct VAT group treatment. If financial, economic and organizational links exist, it is not possible for a VAT entrepreneur to leave the VAT group. Provided that all other conditions are met, it is possible to apply for a VAT group retroactively.


Can an overseas company be included in a VAT group?


No. Only businesses that are established in the Netherlands may join a VAT group. However, fixed establishments of foreign companies are regarded as businesses established in the Netherlands and can join a Dutch VAT group, thereby under circumstances, creating a de facto VAT group including the overseas head office.

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Returns

How frequently are VAT returns submitted?


Most VAT registered businesses are required to submit VAT returns on a quarterly basis. On request VAT returns may be filed on a monthly basis. If the tax liability does not exceed EUR1,883 per year, businesses can file VAT returns on an annual basis. Dutch VAT registered businesses that are generally required to file quarterly returns can opt to file monthly returns, e.g. because they are generally in refund position. Please note that Dutch established companies and foreign companies registered via a fiscal representative with a general license are obliged to submit VAT returns electronically.


Failure to submit VAT returns and settle any outstanding VAT payments on time may result in a penalty. For not making the payment in time, the penalty may be up to a maximum of EUR4,920.


Are there any other returns that need to be submitted?


European Sales List (ESL)


If a business supplies goods, which are shipped from the Netherlands to VAT registered businesses in other EU Member State states, and these supplies qualify as intra-Community supplies, it is required to complete ESLs. From 1 January 2010 onwards, the supply of B2B services from the Netherlands to customers established in other EU Member States on which the new main rule applies must also be included in the ESLs.


If the amount of intra-Community supplies of goods exceeds EUR100,000 per quarter, the ESLs need to be completed on a monthly basis. The cross border supplied B2B main rule services may be reported on a monthly or quarterly basis. In certain circumstances the tax authorities may allow a business to submit ESLs on an annual basis. Dutch established companies and foreign companies registered via a fiscal representative with a general license must submit ESLs electronically.


Non-compliance with the ESL obligations may result in a penalty of up to EUR4,920 per return.


Intrastat Statistical Declarations


VAT registered businesses with a value of dispatches or arrivals to or from other EU Member States, which exceed the thresholds (EUR900,000 per calendar year for dispatches and EUR900,000 per calendar year for arrivals) must complete Intrastat declarations (statistical returns) each month.


Non-compliance with Intrastat reporting requirements may result in a penalty.


If a business receives a purchase invoice in foreign currency, which exchange rate should be used for VAT reporting purposes?


The exchange rate of the Dutch National Bank (which should be equal to the ECB rates) at the moment the VAT is due.

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VAT recovery

Can a business recover VAT if it is not registered?


Yes. If a company established in another EU Member State then it should file an electronic refund request (based on the Directive 2008/9/EEC) with the tax authorities in their own Member State. A non-EU business should recover the VAT under the 13th Directive.


Under both of these provisions there are time limits for making claims. EU businesses should file the refund request ultimately 30 September of the following year. Non-EU businesses should file the refund request within six months after the year during which the Dutch VAT was charged. However, if the claim term has expired, the Dutch tax authorities will generally handle the reclaim if the request is submitted within five years after the calendar year in which the VAT was incurred. A consequence of filing a reclaim after the formal due date is that business cannot make an appeal against the decision of the Dutch tax authorities.


Dutch VAT regarding the years 2008 till 2011


Entrepreneurs established in Belgium (year 2008 only), Bulgaria, Cyprus, Greece, Hungary or Sweden must use the paper form 'Application VAT refund' which can be downloaded from the Dutch tax authorities’ website. Furthermore a 'Certificate concerning the capacity of the taxpayer', which states that the company is in fact considered an entrepreneur in its country of establishment should be included.


Application and the enclosures must be sent to:


Belastingdienst Limburg/Kantoor Buitenland
Postbus 2865
6401 DJ Heerlen
Netherlands


Entrepreneur established in any other EU-country than the one listed above or in Belgium (as of the year 2009) must submit their Dutch VAT refund request with respect to the years 2007 till 2011 digitally, using the web portal of the tax authorities in their own EU member state.


Does your country apply reciprocity rules for reclaims submitted by non-established businesses?


No, the Netherlands do not apply reciprocity rules.


Are there any items that businesses cannot recover VAT on?


Yes. There are certain items that businesses cannot recover VAT on. For example:


  • Exempt supplies: where VAT relates only to VAT exempt supplies, there is no possibility to recover input VAT. Where VAT relates to both taxable and exempt supplies the company needs to make an apportionment.
  • Non-business (including private) activities: input VAT on non-business activities cannot be recovered. Input VAT on employee benefits-in-kind should not be recovered if the benefits exceed a threshold of EUR227 per employee per year. Where VAT relates to business and non-business activities, an apportionment is required (except for capital goods, for which special rules apply).
  • Motor cars: if a car is used for business and private/non-business purposes, the input VAT is in principle recoverable. If the taxpayer filed Dutch VAT returns, it should report an adjustment at the end of the year to account for the private/non-business use of the car. For Directive 2008/9/EEC or 13th Directive reclaims, practice is that all input VAT should be reclaimed in the application, after which the Dutch tax authorities will correct the reclaimed VAT with a fixed percentage.
  • Business entertainment: VAT is generally recoverable on business entertainment costs, but an adjustment at the end of the VAT year may be applicable.
  • Goods sold under one of the margin schemes for second hand goods.
    There are a number of schemes which provide for VAT to be accounted for on the goods’ sales margin, but do not allow VAT recovery on the purchase of those goods.
  • Expenses: VAT can be recovered only if invoiced to a taxable person. Where invoices and bills are made out to an employee, the VAT is not deductible.
  • Food and drink: VAT incurred on food or drink supplied in restaurants, bars, hotels, etc. cannot be recovered.

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International Supplies of Goods and Services

How are exports of goods and services treated?


Goods


If a business sells and supplies goods from the Netherlands to a private customer who is registered for VAT in another EU Member State and the sale involves the removal of those goods from the Netherlands (either by the supplier or its customer) to that EU Member State, then it does not need to charge VAT and may zero rate the supply as an intra-Community supply. It must obtain the customer's VAT number and quote it on its invoice. It should also obtain evidence of the goods' removal from the Netherlands.


If a business sells and supplies goods from the Netherlands to a customer who is not registered for VAT in another EU Member State, it will have to charge Dutch VAT. If its sales exceed a certain threshold for that EU Member State it may have to register in the EU Member State under what is known as the Distance Selling Scheme.


If a business exports goods to a customer (business or private) outside of the EU then it does not need to charge VAT but, as for intra-Community sales, it should make sure that in all cases, proof of dispatch/delivery to support the zero rating are kept.


Services


When a Dutch established business supplies services to a foreign business customer (B2B), in general the supply of services is taxable in the country of the recipient under the reverse charge mechanism. If the company, however, supplies services to a private consumer (B2C), the services are in general taxable in the country of the supplier and therefore subject to Dutch VAT.


The following exceptions apply to the B2B and B2C main rules as described above:


  • Services involving real estate (taxable in the country where the real estate is located).
  • Restaurant and catering services (taxable in the country where these services are performed. Other rules apply if these services are performed on board a ship, aircraft, or train).
  • Passenger transport (taxable in we country here the transport services are actually performed).
  • The admission to cultural, artistic, sporting, scientific, educational, entertainment, and similar activities, along with the ancillary services (taxable in the country where those activities are physically carried out).
  • Short-term hiring of transportation vessels (for ships maximum 90 days/for other means of transport maximum 30 days; taxable in the country where the vehicle is actually put at the disposal of the customer.

The following exceptions apply to the B2C main rule:


  • Services with regard to cultural, artistic, sporting, scientific, educational, entertainment, and similar activities, along with the ancillary services (taxable in the country where those activities are physically carried out).
  • Intermediary services (taxable in the country where the underlying transaction is taxable).
  • Intra-Community transport of goods (taxable in the country of departure). For other types of goods transportation for non-taxable customers, the place of service is the place where the transportation is actually performed.
  • Transportation-related services (taxable in the country where the services are physically carried out).
  • Services involving movable tangible goods (taxable in the country where the activities are actually carried out).
  • Services performed electronically by a VAT entrepreneur not established in the EU to non-taxable customers (taxable in the country where the customer of the service is located).
  • Long-term hiring of means of transport other than pleasure boats (taxable in the country where the customer of the service is located).
  • Long-term hiring of pleasure boat (taxable where the pleasure boat is actually put at the disposal of the customer)
  • The following services rendered by a taxable persons established outside the EU, rendered to a legal person (not a VAT entrepreneur) established in the Netherlands, where the actual use and enjoyment is in the Netherlands (taxable in the Netherlands):
    • the transfer of licenses and similar rights
    • advertising services
    • services performed by consultants, as well as data-processing and information-provision services
    • the obligation to refrain, in whole or in part, from pursuing a business activity
    • banking and insurance services
    • supply of staff
    • hiring out of movable property, with the exception of means of transport
  • The hiring of means of transport by taxable persons established outside the EU, rendered to a person living or established in the Netherlands, where the actual use and enjoyment is in the Netherlands (taxable in the Netherlands).
  • Telecommunication services, and radio/ television broadcast services by taxable persons established outside the EU, rendered to a person living or established in the Netherlands, where the actual use and enjoyment is in the Netherlands (taxable in the Netherlands).

The following services performed for non-taxable customers that are established or resident outside the EU are taxable in the country where the customer is established:


  • the transfer of licenses and similar rights
  • advertising services
  • services performed by consultants, as well as data-processing and information-provision services
  • the obligation to refrain, in whole or in part, from pursuing a business activity
  • banking and insurance services
  • supply of staff
  • hiring out of movable property, with the exception of means of transport
  • operating natural gas and electricity-distribution systems
  • telecommunications services
  • radio and television broadcast services and
  • services performed electronically.

How are goods dealt with on importation?


When goods are imported into the Netherlands from outside the EU, import VAT and customs duty may be due. There is a simplification available that allows import VAT to be accounted for and recovered through the VAT return simultaneously rather than being paid at import and then recovered at a later date. It is necessary to apply to the local tax authorities for a license (article 23 license) to operate this procedure.


A foreign entity can only obtain a license if it first appoints a fiscal representative who is established in the Netherlands. The representative could either be a third party or a local affiliated company (BV or NV). KPMG Meijburg & Co offers, via its 100% subsidiary KPMG Meijburg Fiscal Agents BV, VAT representation services.


How are services which are brought in from abroad treated for VAT purposes?


If a VAT entrepreneur established in the Netherlands or a legal entity having a VAT identification number purchases services from suppliers established outside the Netherlands, it will as a main rule be required to apply the reverse charge. This is intended to take away any VAT advantage of buying those services from outside the Netherlands.


Under the reverse charge businesses are required to account for a notional amount of VAT as output tax on their VAT return covering the period in which they received the invoice and they recover this VAT as input tax on the same return (insofar allowed, see VAT Recovery).


If businesses are able to recover all the VAT the reverse charge has no cost effect and is a VAT compliance matter only. However, a (partly) VAT exempt business there is likely to incur a VAT cost depending on the level of recovery allowed under the partial exemption method.


Certain specific services for which the B2B main rule does not apply may result in another place of supply of the service than the Netherlands. This could lead to VAT obligations for the supplier or recipient in the country in which the service is taxable. For an overview of the exceptions to the B2B main rule please refer to the section "How are exports of goods and services from the Netherlands treated?"

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Invoices

Is a business required to issue tax invoices?


It is in principle required to issue invoices for supplies of goods and services to and prepayment received from other VAT entrepreneurs or legal bodies. It is also required to issue invoices for distance sales. VAT entrepreneurs usually supplying business to business are required to issue invoices for all their supplies.


What do businesses need to show on a tax invoice?


If a business must issue a tax invoice it should contain the following data:


  • Date of issue.
  • A sequential invoice number: If the invoice adjusts an earlier invoice (such as, a credit note), unambiguous reference should be made to the original invoice.
  • Supplier’s VAT number.
  • Customer’s VAT number in case of intra-Community supplies and in case the reverse charge mechanism applies.
  • Supplier name and address.
  • Customer name and address.
  • The quantity and nature of the goods/services supplied.
  • Tax point (date of taxable supply): If an advanced payment is received prior to the date the invoice is issued then the date of the advanced payment must be shown.
  • The taxable amount per rate.
  • Unit price (exclusive of any VAT).
  • Rate of any discounts (if not included in the unit price and if applicable).
  • The VAT rate applicable.
  • The amount of VAT payable in Euros (EUR).
  • In the case of an intra-Community supply or an exemption, this must be stated on the invoice, for example by including the words 'intra-Community supply’ or 'VAT exempt'. No specific legal reference is necessary, but the description of the supplies must be clear enough to determine the applicability.
  • New means of transport/margin schemes (if applicable).
  • VAT number, name, and address of fiscal representative (if applicable)
  • Local language requirements: invoices may be drafted in any language, but a translation may be required in case of an audit.
  • Exempt and zero rated supplies: only if certain conditions are fulfilled an entrepreneur does not have to issue invoices for exempt supplies.
  • In cases where the relevant regulation applies, the following referrals are mandatory:
    • ‘cash accounting'.
    • 'self-billing'.
    • 'reverse charge'.
    • 'margin scheme – travel agents'.
    • ‘margin scheme – second-hand goods’.
    • 'margin scheme – works of art'.
    • 'margin scheme – collector's items and antiques'.
  • In cases where the intra-Community supply of a new vehicle is involved: the information indicating that the vehicle is new.
  • The number under which the supplier is registered with the Chamber of Commerce (this requirement is not a consequence of the VAT rules).

Simplified invoices may be issued if the amount, including VAT, does not exceed EUR 100, or if the invoice entails a correction on an earlier invoice. A simplified invoice may not be issued in cases involving (i) distance sales, (ii) intra-Community supplies, or (iii) if the supply is considered to take place in another Member State than the state of residence of the performing business, and where the reverse charge mechanism applies.


The mandatory content of a simplified invoice includes:


  • the date on which the invoice was issued;
  • the identity of the supplier;
  • the nature of the goods supplied or services rendered;
  • the VAT amount owed or the information that allows that amount to be calculated;
  • a correction invoice also contains a specific and unambiguous reference to the original invoice and an explicit statement with respect to the corrections.

Can businesses issue invoices electronically?


Yes. Suppliers are free in choosing form and means by which electronic invoices are drafted and sent. It is thus permitted to issue electronic invoices without any digital signature. No prior approval of the tax inspector is required to start issuing electronic invoices; it is however required to obtain the consent of the recipient of the invoices. This consent will be inferred if a recipient processes and pays invoices received electronically.


Is it possible to operate self-billing?


Yes.


Can a business issue VAT invoices denominated in a foreign currency?


Yes, provided that the VAT amount is mentioned in Euro currency as well on the invoice

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Transfers of Business

Is there a relief from VAT for the sale of a business as a going concern?


Yes. If a company sells its business as a going concern then VAT may not be due. There are certain conditions to satisfy.

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Options to Tax

Are there any options to tax transactions?


Yes. There is an option to tax certain types of transactions in immovable property, if certain conditions are met. Furthermore there is a system for professional trainers, similar to an option to tax.

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Head Office and Branch transactions

How are transactions between head office and branch treated?


If a head office makes a charge to its branch or vice versa it is not treated as a supply for VAT purposes in the Netherlands. Please note that certain formalities need to be met in case goods are transferred from abroad to the Netherlands and vice versa.

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Bad Debt

Is a business able to claim relief for bad debts?


If it is clear that the debtor is not going to pay, VAT can be claimed on the unpaid element. The supplier should be able to prove that sufficient attempts were made to receive payment or should have proof that the customer is bankrupt (for example a letter from the liquidator).

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Anti-Avoidance

Is there a general anti-avoidance provision under VAT law?


Yes, however it is seldom applied successfully. Besides specific anti-avoidance reverse charge rules there are several specific anti-avoidance schemes for branches, such as:


  • sale of high-risk goods such as car parts and the complete range of land vehicles such as cars, motorcycles, motor bikes and tractors, all telecommunications equipment, all computer hardware and software, and all image and sound carriers
  • supply of staff
  • construction work.

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Penalty Regime

What is the penalty and interest regime like?


When the taxpayer does not file the return on time or does not make a payment on time, the tax authorities impose a fine. The amount of the fine depends on the number of times the tax payer is late to file the tax return and/or to make a payment.


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Tax Authorities

Tax audits


How often do tax audits take place?


There is no prescribed periodicity for tax audits.


Are there audits done electronically in your country (e-audit)? If so, what system is in use?


The tax authorities use data analysis software (ACL).


Advance rulings and decisions from the tax authority


Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?


Yes.


Are rulings and decisions issued by the tax authorities publicly available in your country?


No.

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Miscellaneous

In your country, are there unique specific indirect tax rules (regimes) that differ from standard indirect tax rules in other jurisdictions?



The Dutch VAT rules are broadly in line with the EU VAT Directive. We have some special schemes for example for the correction of input VAT deduction, deferment of import VAT, special decrees for holding companies etc.


Are there indirect tax incentives available in your country (e.g. reduced rates, tax holidays)?


There are reduced rates, import VAT deferment scheme and several decrees for specific situation.

 

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