VAT, GST and Sales Tax in Netherlands

Summary

Name of the tax Value-added tax (VAT)
Date introduced 1-Jan-69
Trading bloc membership European Union (EU) Member State
Administered by Ministry of Finance (http://www.minfin.nl)
VAT rates
Standard 21%
Reduced 6%
Other Zero-rated and exempt
VAT number format NL1 2 3 4 5 6 7 8 9 B 01
VAT return periods
Monthly If requested by the taxable person or the tax authorities
Quarterly In normal circumstances
Annually If VAT payable per year does not exceed EUR1,883 and some other requirements are met
Thresholds
Registration None
Distance selling EUR100,000
Intra-Community acquisitions EUR10,000 (for exempt taxable persons and nontaxable legal persons)
Recovery of VAT by non-established businesses Yes

Scope of the tax

VAT applies to the following transactions:

  • The supply of goods or services made in the Netherlands by a taxable person
  • The intra-Community acquisition of goods from another EU Member State by a taxable person (see the chapter on the EU)
  • The intra-Community acquisition of goods from another EU Member State by a nontaxable legal person in excess of the annual threshold (see the chapter on the EU)
  • Reverse-charge services received by a taxable person and non­taxable legal entities in the Netherlands (that is, services for which the recipient is liable to pay the VAT)
  • The importation of goods from outside the EU, regardless of the status of the importer

Who is liable

A taxable person is any business entity or individual that makes taxable supplies of goods or services, or intra-Community acqui­sitions or distance sales, in the course of a business, in the Netherlands. Taxable activities also include “carrying on a pro­fession” or the “exploitation of tangible or intangible property in order to obtain income on a continuing basis.”

No VAT registration threshold applies in the Netherlands. A tax­able person that begins activity must notify the VAT authorities of its liability to register.

Special rules apply to foreign or “non-established” businesses.

Group registration. Taxable persons established in the Netherlands (including fixed establishments) may form a VAT group if the members are closely bound by “financial, economic and organi­zational links.” Since a ruling from the supreme court (Hoge Raad) in early 2005, the formation of a VAT group no longer requires a decree from the tax office, which is issued after a writ­ten request. However, the tax office may also issue a VAT group decree on its own accord. For legal certainty, it is recommended that persons meeting the conditions for group registration inform the tax office.

The effect of VAT grouping is to treat the members as a single taxable person. As a result, transactions between members of the VAT group are disregarded for VAT purposes. Members of a Dutch VAT group may file a single VAT return, or members may elect to file individually. Each member of a VAT group is jointly and severally liable for all VAT due.

Non-established businesses. A “non-established business” is a business that has no fixed establishment in the Netherlands. The “reverse charge” applies generally to supplies of goods and ser­vices made by non-established businesses to taxable persons and other nontaxable legal persons established in the Netherlands, provided that Dutch VAT is due on these supplies. Under the reverse-charge provision, the taxable person or legal person that receives the supply must account for the VAT due. If the reverse charge applies, the non-established supplier may not account for VAT in the Netherlands. The reverse charge does not apply to supplies made to private persons.

A non-established business that makes supplies of goods or ser­vices in the Netherlands must register for VAT if it is required to account for VAT on the supply.

Tax representatives. Nonresident businesses may register for VAT without appointing a tax representative. In limited circumstances, businesses that are established outside the EU must appoint a tax representative resident in the Netherlands to register for VAT (for example, for distance sales made from another EU country). Non-established businesses, regardless of whether they are established in or outside the EU, may choose to appoint a representative. In some cases, the appointment of a resident tax representative may be advantageous (for example, for dealing with imports using the “postponed accounting” system; see Section E).

Non-established businesses that do not appoint a representative must register at the Tax Office for Non-Resident Businesses in Heerlen, at the following address:

Belastingdienst/kantoor Buitenland

Postbus 4486 6401 DJ Heerlen

Netherlands

Registration procedures. The easiest way to register is to regis­ter yourself at the Dutch Chamber of Commerce (http://www. kvk.nl/). However, it is also possible to register at the Dutch tax authorities. More information can be found at this website: http://www.belastingdienst.nl/rekenhulpen/registratie_buiten­landse_ondernemers/en/. Registration usually takes two to six weeks.

Late-registration penalties. No specific penalty is imposed for late registration. However, if the late registration results in the late payment of VAT or the late submission of VAT returns, penal­ties may be imposed.

Reverse charge. See Non-established businesses above.

Digital economy. Digital services that are rendered to nontaxable persons as of 1 January 2015 are taxable in the country where the nontaxable recipient of the electronic service is established. See more in the chapter on the EU.

Mini One-Stop Shop. There are two schemes for the Mini One-Stop Shop (hereafter: MOSS). Companies can register for the EU-scheme if they are established (either permanent or fixed) in the Netherlands. Companies can register for the non-EU scheme if they are not established (both permanent and fixed) in the EU and do not have an EU VAT registration. More information is included on the website of the Dutch tax authorities:

http://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/business/vat/vat_on_electronic_services/suppli­ers_eu_countries/filing_an_eu_vat_notification_using_moss.

Deregistration. If a taxpayer is no longer considered to be a tax­able person for VAT purposes he can deregister through a letter to the Dutch tax authorities stating that his VAT registration has to be ended.

VAT rates

The term “taxable supplies” refers to supplies of goods and ser­vices that are liable to a rate of VAT, including the zero rate (0%).

The VAT rates are:

  • Standard rate: 21%
  • Reduced rate: 6%
  • Zero rate (0%)

The standard rate of VAT applies to all supplies of goods or ser­vices, unless a specific measure provides a reduced rate, the zero rate or an exemption.

Examples of goods and services taxable at 6%

  • Foodstuffs
  • Books
  • Paintings and other “cultural goods”
  • Certain goods and services used by the agricultural sector
  • Passenger transport
  • Hotel accommodation

Examples of goods and services taxable at 0%

  • Exports of goods
  • Intra-Community supplies of goods
  • Supplies to ships and aircraft used for international transporta­tion

The term “exempt supplies” refers to supplies of goods and ser­vices that are not liable to tax and that, in principle, do not give rise to a right of input tax deduction (see Section F). Some sup­plies are classified as “exempt with credit,” which means that no VAT is chargeable, but the supplier may recover related input tax, e.g., certain financial services provided to a customer established outside the EU.

Examples of exempt supplies of goods and services

  • Supply of immovable property
  • Medical services
  • Finance
  • Insurance
  • Betting and gaming
  • Education

Option to tax for exempt supplies. For the supply and letting of`immovable property, the supplier and customer can opt for taxation. Several conditions have to be met. The most important condition is that the customer can deduct at least 90% (in some specific cases at least 70%) of the VAT that is due on the supply or lease of the immovable property.

Time of supply

The time when VAT becomes due is called the “time of supply” or “tax point.” The basic time of supply for goods is when the goods are delivered. The basic time of supply for services is when the service is rendered or completed.

In the Netherlands, an invoice must be issued before the 15th day of the month following the month in which the supply takes place. The actual tax point becomes the date on which the invoice is issued. However, if no invoice is issued, tax becomes due, at the latest, on the day on which the invoice should have been issued. If the purchaser is not a taxable person, the tax becomes due on the date of the supply.

If the consideration is paid in full, or in part, before the invoice is issued, the actual tax is due on the date on which payment is received (for the amount received).

However, some taxable persons are permitted to account for VAT on a cash basis (cash accounting). If cash accounting is used, the tax point is the date on which the payment is received.

Prepayments. If the customer pays the consideration in install­ments or makes a prepayment, the supplier must issue an invoice for each installment before the date when it falls due or when it receives the prepayment. The time of supply is the date of the invoice.

Intra-Community acquisitions. The time of supply for an intra­Community acquisition of goods is the 15th day of the month following the month in which the acquisition occurred. If the supplier issues an invoice before this date, the time of supply is when the invoice is invoiced.

Imported goods and postponed accounting. The basic time of sup­ply for imported goods is the date of importation or the date on which the goods leave a duty suspension regime. However, taxable persons may delay payment of import VAT by applying for permission to use the “postponed accounting” facility. Under this facility, import VAT is reported on the taxable person’s VAT return (and recovered in the same tax period as input tax, depend­ing on the taxable person’s partial exemption status; see Section F).

A non-established business must appoint a tax representative resident in the Netherlands to use the postponed accounting facility.

Cash accounting. The Netherlands operates a cash accounting scheme. Input VAT deduction is allowed even before the effective payment of the consideration.

Reverse-charge services. For B2B services that are reversed charge, the tax point is the time at which the services are ren­dered.

Continuous supplies of services. For continuous supplies of ser­vices, the main rule (time of invoice) is applicable. However, there is at least one tax point per year.

Intra-Community supplies of goods. For intra-Community sup­plies of goods, the tax point basically lies at the time the invoice is issued or should have been issued (i.e., at the latest on the 15th day of the month following the month in which the supply was made).

Leased assets. For an operational lease, the section about con­tinuous supplies of services is applicable. For a financial lease, the tax point is basically the time the invoice is issued (or should have been issued).

Recovery of VAT by taxable persons

A taxable person may recover input tax, which is VAT charged on goods and services supplied to it for business purposes. Input tax is generally recovered by being deducted from output tax, which is VAT charged on supplies made.

Input tax includes VAT charged on goods and services supplied in the Netherlands, VAT paid on imports of goods and VAT self-assessed on the intra-Community acquisition of goods and reverse-charge services (see the chapter on the EU).

A valid tax invoice or customs document must be kept in the accounts to support a claim for input tax.

Nondeductible input tax. Input tax may not be recovered on pur­chases of goods and services that are not used for business pur­poses (for example, goods acquired for private use by an entrepreneur). In addition, input tax may not be recovered for some items of business expenditure if the value of the private benefit to an employee exceeds an amount of EUR227, excluding VAT, per person per year. If the goods or services are used for private purposes, in specific situations, the legal entity is deemed to make a supply of goods or services and output VAT is due.

Examples of items for which input tax is nondeductible

  • Private expenditure
  • Business gifts (valued at more than EUR227 if the recipient could not have recovered the input VAT in its own right)
  • Restaurant meals
  • Home telephone costs
  • Alcohol and tobacco

Examples of items for which input tax is deductible
(if related to a taxable business use)

  • Purchase, hire, lease, maintenance and fuel for vans and trucks
  • Car hire, subject to special rules, as well as the purchase, hire, lease, maintenance and fuel for cars put at the disposal of employees, subject to special rules
  • Conferences, seminars and training courses (restaurant meals are excluded)
  • Advertising
  • Taxis
  • Business travel costs
  • Business gifts (valued at less than EUR227 a year or if the recipient of the gift could have recovered the input VAT in its own right)
  • Business entertainment (subject to the limit of EUR227 a year on employee expenses)

Employee expenses. A maximum limit of EUR227 annually applies to the value of expenses incurred per employee on which input VAT may be recovered, including drinks, meals from a discounted company cafeteria and company parties, mobile phones and computers made available to employees at home. The EUR227 limit relates to the net cost or value of the expenses incurred, rather than the amount of VAT recovered. VAT on employee expenses can only be recovered if a valid tax invoice has been issued to the employer.

The employer may recover input VAT on employee expenses in full throughout the year. At the end of the year the employer must calculate the average cost of expenses per employee. If the aver­age cost of expenses per employee exceeds EUR227, all of the VAT recovered on these expenses throughout the year must be repaid (not just the VAT on expenses in excess of the EUR227 limit).

Partial exemption. Input tax directly related to making exempt sup­plies is not generally recoverable. If a taxable person makes both exempt and taxable supplies, it may not recover input tax in full. This situation is referred to as “partial exemption.” Exempt with credit supplies are treated as taxable supplies for these purposes.

In the Netherlands, the amount of input tax that a partially exempt business may recover is calculated in the following two stages:

  • The first stage identifies the input VAT that may be directly allocated to taxable and to exempt supplies. Input tax directly allocated to taxable supplies is deductible, while input tax directly related to exempt supplies is not deductible.
  • The second stage identifies the amount of the remaining input tax (for example, on general business overhead) that may be allocated to taxable supplies and recovered.

The calculation is normally based on the percentage of the values of taxable and exempt supplies made in the period. The recovery percentage is rounded up to the nearest whole number (for example, 5.2% becomes 6%). In specific situations other meth­ods of apportionment may be used.

Capital goods. Capital goods are items of capital expenditure that are used in a business over several years. Input tax is deducted in the VAT year in which the goods are acquired. The amount of input tax recovered depends on the taxable person’s partial exemption recovery position in the VAT year of acquisition. However, the amount of input tax recovered for capital goods must be adjusted over time if the taxable person’s partial exemp­tion recovery percentage changes during the adjustment period.

In the Netherlands, the capital goods adjustment applies to the following assets for the number of years indicated:

  • Immovable property: adjusted for a period of 10 years
  • Movable property subject to depreciation for income tax pur­poses: adjusted for a period of five years

The adjustment is applied each year following the year of acqui­sition, to a fraction of the total input tax (1/10 for immovable property and 1/5 for other movable capital goods). The adjust­ment may result in either an increase or a decrease of deductible input VAT, depending on whether the ratio of taxable supplies made by the business has increased or decreased compared with the year in which the capital goods were acquired.

The adjustment is not made if it is insignificant (that is, less than 10% of the deducted amount for that specific year).

Refunds. If the amount of input tax recoverable in a period exceeds the amount of output tax payable in that period, the tax­able person has an input tax credit. A taxable person may claim a refund of the credit by submitting the VAT return for the period. The refund is paid in cash.

Preregistration costs. Input tax on preregistration costs is deduct­ible as long as the (future) taxpayer can demonstrate that the goods or services were issued in preparation of a future eco­nomic activity. In practice this means the VAT on these costs can be deducted in the first VAT return of the company.

Write-off of bad debts. When the payment of a debtor is not expected to be received anymore, the VAT that was due on this payment will be refunded.

Noneconomic activities. The input tax on costs related to noneco­nomic activities is not deductible, unless and in so far the non­economic activity is subservient to the taxpayers (taxable) economic activities.

Recovery of VAT by non-established businesses

The Netherlands refunds VAT incurred by businesses that are neither established in the Netherlands nor registered for VAT there. A non-established business may claim Netherlands VAT to the same extent as a VAT-registered business.

For businesses established in the EU, refund is made under the terms of EU Directive 2008/9/EG. For businesses established outside the EU, refund is made under the terms of the EU 13th Directive. The Netherlands does not exclude any non-EU country from the refund scheme.

For the general VAT refund rules contained in EU Directive 2008/9/EG and the EU 13th Directive, see the chapter on the EU.

Refund application. Under EU Directive 2008/9/EG, the formal deadline for refund claims by EU businesses is 30 September of the year following the year in which the input tax is incurred. However, a claim may be submitted within five years after the year in which the input tax is payable. In the case of such late claims (i.e., claims filed after 30 September of the year following the year of incurrence, but within the five-year period), no appeal is possible against negative decisions. Refund claims must be submitted electronically to the local tax authorities of the EU applicant. For further information, see the chapter on the EU.

The minimum claim period is three months, while the maximum period is one year. The minimum claim for a period of less than a year is EUR400. For an annual claim, the minimum amount is EUR50.

The formal deadline for refund claims under the EU 13th Directive is 30 June of the year following the year in which the input tax is incurred. However, a claim may be submitted within five years after the year in which the input tax is payable. In the case of late claims, no appeal is possible against negative decisions.

Claims may be submitted in Dutch, English or German. The application for refund must be accompanied by the appropriate documentation (see the chapter on the EU).

The minimum claim period is three months, while the maximum period is one year. The minimum claim for a period of less than a year is EUR400. For an annual claim, the minimum amount is EUR5.

Applications under the EU 13th Directive for refunds of Netherlands VAT must be sent to the following address:

Belastingdienst/kantoor Buitenland

Postbus 2865 6401 DJ Heerlen

Netherlands

Repayment interest. Under EU Directive 2008/9/EG, the Dutch VAT authorities must make refunds of Dutch VAT within 4 months and 10 days after the date on which the refund claim is submitted. In the case of a late refund, the claimant is entitled to interest at the government interest rate in force at the time, in addition to the repayment.

For EU 13th Directive refunds, the Dutch VAT authorities have committed to make refunds within six months after the date on which the claim is submitted for the refund. If the refund is not made within this period and if the fault lies with the VAT author­ities, the claimant is entitled to interest at the government interest rate in force at the time, in addition to the repayment.

Invoicing

VAT invoices and credit notes. A taxable person must generally provide a VAT invoice for all taxable supplies made, including export supplies and intra-Community supplies. Invoices are not automatically required for retail transactions, unless requested by the customer. However, the issuance of invoices for wholesalers is required.

Taxable persons must retain invoices for seven years. For real estate, a taxable person must retain the invoice for 10 years.

A VAT invoice is required to support a claim for input tax deduc­tion or a refund under the EU Directive 2008/9/EG or EU 13th Directive refund schemes (see the chapter on the EU).

A VAT credit note may be used to reduce the VAT charged and reclaimed on a supply. It must be cross-referenced to the original VAT invoice.

Electronic invoicing. Electronic invoicing is permitted in line with EU Directive 2010/45/EU.

Proof of exports and intra-Community supplies. VAT is not charge­able on supplies of exported goods or on the intra-Community supply of goods (see the chapter on the EU). However, to qualify as VAT-free, exports and intra-Community supplies must be sup­ported by evidence that proves the goods have left the Netherlands. Acceptable proof includes (a bundle or combination of) the fol­lowing documentation:

  • For an export, customs documentation, transport documenta­tion, order forms and proof of payment issued by a foreign bank
  • For an intra-Community supply, a copy of the invoice indicating the customer’s valid VAT identification number (issued by another EU Member State), plus a range of commercial docu­mentation (such as purchase orders, transport documentation, proof of payment and contracts)

Foreign-currency invoices. A VAT invoice must be issued in euros (EUR). If an invoice is issued in another currency, the VAT amount must be indicated in euros, using the daily conversion rate published by the European Central Bank.

B2C invoices. Effective 1 January 2015, new rules apply to the place of supply for supplies of telecommunications, broadcasting and electronic services to non-VAT taxable customers. For fur­ther details of the VAT rules on electronic services in the EU, please refer to the European Union chapter.

VAT returns and payment

VAT returns. VAT returns are submitted electronically in the Netherlands. They are submitted for monthly, quarterly or annual periods, depending on the amount of VAT payable.

Quarterly VAT returns must be filed in standard circumstances. Filing the VAT return on a monthly basis can be requested by the taxable person at the tax authorities. If the VAT liable is not paid on time, the tax authorities also may require the taxable person to file the VAT returns monthly.

Taxable persons that are liable to pay a VAT amount of less than EUR1,883 annually may file annual VAT returns if some other requirements are met.

The return must be filed by the last day of the month following the end of the reporting period, together with full payment.

Non-established businesses registered for VAT in Heerlen must file their VAT returns and pay VAT due before the last business day of the second month after the reporting period.

Return liabilities must be paid in euros.

Special schemes. Not applicable.

Electronic filing and archiving. Electronic filing and archiving is allowed under the Dutch legislation. When analog data is trans­formed into digital data, it needs to be guaranteed that the data is transferred one-on-one. In practice this means that even the “cof­fee stains” – if present, of course – will be visible after elec­tronic filing. The data must be preserved in such a way that they can be made readable in reasonable time. A digital administration therefore needs to be easily accessible. If a change of computer system occurs, it needs to be secured that the data from the “old” computer system is still readable. Also, the data needs to be stored appropriately. This means in particular that a back-up will be made regularly.

Annual returns. See section above.

Penalties

Penalties are assessed for the late submission of a VAT return or for the late payment of VAT, in the following amounts:

  • For the late submission of a VAT return, the maximum fine is EUR131.
  • For errors in the payment of VAT, the maximum fine is 10% of the VAT due, up to a maximum amount of EUR5,278.
  • For the late payment of VAT, the minimum fine is EUR50, and the maximum fine is 10% of the VAT due, up to a maximum amount of EUR5,278.
  • If the late payment is caused by negligence or dishonest con­duct, fines ranging from 25% to 100% of the VAT payable may be imposed.
  • If a taxable person knows errors were made in the payment of VAT and did not notify the tax authorities accordingly, a pen­alty may be imposed up to 100% of the VAT that was not reported and paid as a result of the error, i.e., 25% is the typical penalty for gross negligence, 50% for intent and 100% for fraud.

In addition, taxpayers must file supplementary returns if it appears that the information provided was inaccurate and/or incomplete. Noncompliance with the duty to file supplementary returns is subject to an offense penalty of up to 100% of the amount of tax not levied (or allegedly not levied). This penalty may be imposed if the taxpayer knew that the tax levied was too low.

EU filings

Intrastat. A taxable person that trades with other EU countries must complete statistical reports, known as Intrastat, if the value of its sales or purchases of goods exceeds the applicable thresh­old. The threshold applies to intra-Community supplies (Dispatches) and intra-Community acquisitions (Arrivals) sepa­rately. Separate reports are required for Arrivals and Dispatches.

The threshold for Intrastat Arrivals for the 2016 calendar year is EUR1 million.

The threshold for Intrastat Dispatches for the 2016 calendar year is EUR1.2 million.

The Intrastat return period is monthly. The submission deadline is the 10th day following the return period. Intrastat declarations must be completed in euros.

A penalty up to a maximum amount of EUR16,000 may be imposed for (structural) failure to comply with Intrastat filing and reporting obligations.

EU Sales Lists. If a taxable person makes intra-Community sup­plies in any return period, it must submit an EU Sales List (ESL).

An ESL is not required for any period in which the taxable person has not made any intra-Community supplies.

ESLs must be filed on a monthly basis if the total value of the supplied goods exceeds EUR50,000. If the total value of the sup­plied goods does not exceed EUR50,000, the ESLs may be sub­mitted on a quarterly basis.

Taxable persons must submit ESLs for services if all of the fol­lowing conditions are satisfied:

  • The place of supply of business-to-business (13213) services is located in another EU Member State.
  • The VAT due in that EU Member State is reverse charged to the customer.
  • The service is not exempt from VAT in the other EU Member State.

The ESLs for services must be submitted on a monthly basis, but a business can opt to submit the ESLs on a quarterly basis.

If a business does not file an ESL on time, it receives a reminder. If the return is still not filed, the VAT authorities may impose a fine. The amount of the penalty depends on the number of suc­cessive omissions. The following are the penalties:

  • For the first omission, a fine of 2.5% of EUR5,278 is imposed.
  • For the second and third omissions, a fine of 5% of EUR5,278 is imposed.
  • For a fourth or subsequent omission, a fine of 25% of EUR5,278 is imposed.

Under certain conditions, the VAT authorities may impose a maximum fine of EUR5,278 for missing ESL reports or ESLs containing systematic errors or omissions.