VAT

• What is VAT?
• How does Dutch VAT work?
• When are you a taxpayer
• What are the Dutch VAT rates
• How do our VAT services help your business?

Our VAT services include, but are not limited to:

• VAT advice
• Objection and appeal procedures
• Setting up a VAT administration
• Review VAT invoices
• Due diligence examination
• Preparation of VAT returns and Intrastat returns
• Dutch VAT registration
• Application for an EORI number
• Dutch VAT compliance
• Dutch VAT refund
• Calculation VAT revision
• Calculation (pre) pro rata
• Review of your company’s invoices from a VAT perspective
• Statistical reporting

What is VAT (Value Added Tax)?

VAT is short for value-added tax and means ‘omzetbelasting’ or ‘btw’ in Dutch. It’s the most important indirect tax and is levied on the net invoice price that is charged by businesses for the supply of goods and/or services.

How does Dutch VAT work?

Within the Netherlands, the levy is an X percentage, depending on the goods or services. (We explain more about it later on.) Additionally, VAT is levied on the customs value of goods imported into the Netherlands. Tax is borne by the ultimate consumer of the goods. When you consume, you pay.

The general principle is that the VAT paid by a business to its suppliers -known as the input VAT- can be offset against the VAT charged by this same business to its customers. This is the so-called output VAT. The net amount of VAT either retained or paid out is then remitted to or is recovered from the tax authorities.

When am I a taxpayer?

If you are any person or entity conducting business (or profession) as an entrepreneur, you are obliged to pay tax. This makes you a ‘taxpayer’. The definition covers permanent establishments or branches of foreign companies as well.

Dutch taxpayers that are financially, economically, and organizationally integrated with other Dutch taxpayers may be treated as a single taxable unit, known as a fiscal unity.

The types of transaction that may be liable to VAT:

• The supply of goods and/or services in the Netherlands.
• Import of goods from outside the EU by any person.
• Intra-EU acquisitions of goods in the Netherlands by taxpayers in the course of their business or by entities that don’t carry on a business.
• Intra-EU acquisitions of new means of transportation by any person in the Netherlands.

Whether a supply or acquisition is considered to be made in the Netherlands is not necessarily determined by where the physical transaction takes place.

In the case of goods, it is generally the place of shipment or, if none, the place where the goods are actually supplied. In the case of services, the general rule is the place where the recipient is located if the recipient is a business customer.

Dutch VAT rates

There are 3 VAT rates -or VAT tariffs- in the Netherlands. Generally, they can be divided as follows.

• 0% Dutch VAT rate: the 0% rate applies to Dutch taxpayers that supply goods or services from the Netherlands to entrepreneurs in another EU country. In that situation, the VAT is reversed to the country of the recipient of the goods or services.
• 9% Dutch VAT rate: the 9% rate is also known as the low rate or low tariff. It’s applied to basic necessities, such as: food, drinks, agricultural products and services, medication, papers, magazines and books.
• 21% Dutch VAT rate: the 21% rate is also known as the standard rate or general rate. If there is no cause for an exemption, the reverse-charge mechanism, the 0% rate or the 9% rate? Then a VAT of 21% must be charged.

Paul Hulshof explains more about the Dutch VAT rates in the video below.

Invoices and VAT

Usually, a taxpayer must show the VAT due as a separate amount on invoices. A taxpayer must compute the VAT due or reclaimable and file VAT returns either monthly or quarterly. VAT due should be paid to the tax authorities when the return is filed that is as a main rule within one month after the end of the relevant period.

A supply of goods or services in the Netherlands where the supplier is located outside the Netherlands can result in a tax liability for the Dutch customer instead of the foreign supplier, the so-called ‘reverse charge’.

VAT Advice by TGS lime tree

Entrepreneurs need to deal with VAT. That’s a fact. Our VAT specialists advice you on both national and international VAT issues. A brief selection of our advisory services:

• Setting up a VAT administration
• Review VAT invoices
• Objection and appeal procedures
• Due diligence examination
• Consulting in or preparation and submitting of VAT returns, Intra Community declarations. and statistical reporting (Intrastat returns)

Are there any exemptions of Dutch VAT?

There are supplies of goods and services that are exempt from tax, despite falling within the scope of the principles mentioned above. Additionally, the supply of services of a social or cultural nature, medical services, educational services, insurance, financing, and most banking services may also be exempt.

Our VAT services: Dutch VAT registration by TGS lime tree

Are you an entrepreneur who is not based in the Netherlands, and do you supply goods/services to the Netherlands? Then you are a so-called ‘foreign entrepreneur’ in terms of Dutch VAT.

Registration with the Dutch VAT -and receiving your Dutch VAT number- enables you to commence trading and charging Dutch VAT.

We can help you with:

• General Dutch VAT registration (with the Tax and Customs Administration)
• Requesting your VAT number
• Dutch VAT compliance
• Dutch VAT refund

Dutch VAT refund by TGS lime tree

If you are a foreign entrepreneur who has no taxable presence for VAT purposes in the Netherlands, you are eligible for a refund of the Dutch VAT that you have incurred. Within six months after the calendar in which the VAT has been incurred, you must file a request for a refund. There are two possible cases:

• You are established in an EU country
• You are established in a non-EU country

We assist EU residents and non-EU residents. In the first case, you can reclaim Dutch VAT over the past 5 years. Your request of a VAT refund should me made in digital form to the tax authorities of the country in which you are established.

If you are established in a non-EU country, you are obliged to enclose the following documents together with your VAT refund claim:

• Declaration of entrepreneurship
• Original invoices
• Import documents

Due to the relatively complicated Dutch tax laws, we can take care of this process or assist you with your Dutch VAT refund.

VAT revision by TGS lime tree

Entrepreneurs may deduct VAT on goods and services that are used in connection with their business for taxable activities. This input VAT usually is claimable in the period in which you receive the invoices for the goods or services.

But when it comes to the acquisition of immovable or movable property, that has to be amortized for income tax or corporate tax purposes, this deduction of input VAT is not yet final.

Because of our wide experience regarding VAT revisions, we know exactly how to handle these kind of matters. If you have any questions regarding VAT revisions, feel free to contact our team of VAT specialists.

In the case of immovable property

In respect of immovable property, this input VAT deduction is re-examined for another nine financial years after the financial year in which it was taken into use. For movable property, this is four years after the year of commissioning. If there are any changes that occur in this period of time, the initially claimed deduction should be revised. This process is called the VAT revision.

This VAT revision means that, during the use of the goods, the actual usage is re-examined on an annual basis and compared to the usage (taxable/exempt) in the financial year in which the good was commissioned for the first time.

This can -in each year of the revision period- result in an additional deduction or a refund of input VAT. However, if the goods are sold within the review period, a VAT revision has to take place for the remaining time of the revision period at once.

If the supply of the goods is taxable, the goods are considered to be used for taxable purposes until the end of the revision period.

Real estate transfer tax/property transfer tax

It is mandatory to pay Dutch property transfer tax -overdrachtsbelasting- if you are the owner of:

• Immovable property (business premises, or a residential building)
• rights to immovable property (building and planting rights or a leasehold)

The transfer tax on property is 2% for homes and other sorts of immovable property (shed or garden). The transfer tax for all other immovable properties (business premises or building plots) is currently 6%. Are you becoming the owner of shares in a public limited company (NV), a private limited company (BV) or partnership -whose possessions consists mainly of immovable property- you are obliged to pay transfer tax.

Is the property transfer tax deductible?

No, the property transfer tax is not tax deductible as business costs. You are obliged to add up the tax to the property its balance sheet value.

How to pay the property transfer tax?

Usually, a notary draws up a deed to transfer a property. After that, you are charged the owed property transfer tax, file the property tax return and pay the tax to the Tax and Customs Administration (Belastingdienst).

Different rules apply when shares in a real estate company are acquired.