Amsterdam GMT +1
EY Street address:
Mail address: Antonio Vivaldistraat 150 P.O. Box 7925 1083 HP Amsterdam 1008 AC Amsterdam Netherlands Netherlands
Indirect tax contacts
Folkert Gaarlandt
+31 (88) 407-0559 folkert.gaarlandt@nl.ey.com
Walter de Wit +31 (88) 407-1390 walter.de.wit@nl.ey.com
Bas Breimer +31 (88) 407-1005 bas.breimer@nl.ey.com
Gijsbert Bulk +31 (88) 407-1175 gijsbert.bulk@nl.ey.com
Jeroen Scholten +31 (88) 407-1009 jeroen.scholten@nl.ey.com
Eindhoven GMT +1
EY Street address: Mail address: Prof. Dr. Dorgelolaan 12 P.O. Box 455 5613 AM Eindhoven 5600 AL Eindhoven Netherlands Netherlands
Indirect tax contact
Timo Bootsman
+31 (88) 407-4876 timo.bootsman@nl.ey.com
Rotterdam GMT +1
EY Street address: Mail address: Boompjes 258 P.O. Box 2295 3011 XZ Rotterdam 3000 CG Rotterdam Netherlands Netherlands
Indirect tax contacts
Remco van der Zwan
+31 (88) 407-8370 remco.van.der.zwan@nl.ey.com
Daniël Kroesen +31 (88) 407-8361 daniel.kroesen@nl.ey.com
Caspar Jansen +31 (88) 407 1441 caspar.jansen@nl.ey.com
Petra Pleunis +31 (88) 407-3797 petra.pleunis@nl.ey.com
A. At a glance Name of the tax
Value-added tax (VAT)
Local names
Belasting over de toegevoegde waarde (BTW)
Date introduced 1 January 1969
Trading bloc membership European Union (EU)
Administered by Ministry of Finance (http://www.minfin.nl)
VAT rates
Standard 21% Reduced 9%
Other Zero-rated (0%) 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 required by tax authorities
Quarterly In normal circumstances
Thresholds
Registration
Established None
Non-established None
Distance selling EUR10,000
Intra-Community acquisitions EUR10,000
Electronically supplied services EUR10,000
Recovery of VAT by non-established businesses Yes
B. Scope of the tax
VAT applies to the following transactions:
• The supply of goods or services made in the Netherlands for consideration by a taxable person acting as such
• The intra-Community acquisitions of goods from another European Union (EU) Member State, for consideration, by a taxable person acting as such (see the chapter on the EU)
• The intra-Community acquisitions of goods from another EU Member State, for consideration, by a nontaxable legal person in excess of the annual threshold (see the chapter on the EU)
• Reverse-charge goods and services received by a taxable person and nontaxable legal entities in the Netherlands (that is, goods and 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
Quick Fixes. Pending introduction of a “definitive” system for the VAT treatment of intra-Com munity supplies of goods to taxable persons, the EU has adopted Quick Fixes for intra-Commu nity trade in goods. For an overview of the Quick Fixes rules, see the chapter on the EU.
In the Netherlands, the Quick Fixes rules are applicable as of 1 January 2020. An overview of the changes are outlined below.
• VAT identification number and EC Sales Listing: Adopted. For the supplier of goods to other EU Member States to apply the zero VAT rate, a valid VAT identification number of the recipient of the goods must be obtained. The VAT number of the recipient must be issued by an EU Member State other than the Netherlands (the EU Member State of departure). Further to this, the supplier is required to timely submit a correct EC Sales Listing in which the valid VAT number and other required details on the transaction are accurately reported.
• Evidence required for applying zero rate: Adopted, however, in the Netherlands, the existing rules for evidence required to apply the zero VAT rate continue to apply without any changes
other than those mentioned under VAT identification number and EC Sales Listing. The EU rules are considered “safe harbor” rules.
• Simplified VAT regime for call-off stock: Adopted. The existing simplified VAT regime for both call-off and consignment stock that existed in the Netherlands was abolished upon introduction of the Quick Fixes. No transitional measures have been implemented for stock trans ferred to the Netherlands prior to 1 January 2020. The simplified VAT regime for call-off and consignment stock shipped from countries other than EU Member States, remains in place.
• Chain transactions: Adopted, no local derogations.
Effective use and enjoyment. To avoid instances of nontaxation or double taxation, EU Member States can apply use and enjoyment rules that allow a service that is “used and enjoyed” in the EU to be taxed or prevent a service that is “used and enjoyed” outside the EU from being taxed. If a service is taxed in the EU under the use and enjoyment provisions, a non-EU supplier of the service may be required to register for VAT in every Member State where it has customers that are not taxable persons. For the information regarding the rules relating to VAT registration, see the chapters on the respective countries of the EU.
In the Netherlands, no general use and enjoyment rules apply to services supplied to or from the Netherlands. Specific use and enjoyment provisions apply to designated services that are sup plied by taxable persons that are not established in the EU to, e.g., nontaxable legal persons established in the Netherlands and that are actually used and enjoyed in the Netherlands. See the EU chapter for more details.
Transfer of a going concern. For a transaction to qualify as a transfer of going concern (TOGC) in the Netherlands, the transfer must include elements that encompass whole or part of a taxable business. The buyer or recipient is required to continue taxable activities, or at least intend to do so, although it does not have to perform the same activities with these assets as the transferor.
C. 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, on a continuing basis (i.e., not occasionally). Taxable activities also include “carry ing on a profession” or the “exploitation of tangible or intangible property in order to obtain income on a continuing basis.”
No VAT registration threshold exists in the Netherlands. A taxable person that begins an activity must notify the VAT authorities of its liability to register.
A domestic taxable person may also be liable for Dutch VAT on goods or services they purchase (see the subsection on the Reverse charge below).
Special rules apply to foreign or non-established businesses. See the subsection on Non-established businesses below.
Exemption from registration. The Dutch VAT rules do not contain a provision for exemption from registration, but from 1 January 2020, businesses whose global turnover does not exceed EUR20,000 per year can apply a special scheme. Under this scheme, these small and medium enterprises (SMEs) will have to register for VAT, but they will not have to issue invoices or file VAT returns. This means that they also cannot deduct any input tax. Businesses that decide to opt out of this scheme cannot reapply for a three-year period.
Voluntary registration and small businesses. The VAT law in the Netherlands does not contain any provision for voluntary VAT registration. Taxable persons established in the Netherlands with an annual Dutch taxable turnover below EUR20,000 can voluntarily apply for the SMEsimplification (see above).
Group registration. Taxable persons established in the Netherlands (including fixed establish ments) may form a VAT group if the members are closely bound by “financial, economic and organizational links.” 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.
The effect of VAT grouping is to treat the members as a single taxable person. As a result, trans actions 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.
All members of a VAT group in the Netherlands are jointly and severally liable for VAT debts and VAT penalties.
There is no minimum time period required for the duration of a VAT group. Businesses are con sidered to be included in a VAT group for the period during which the relevant substantive requirements are met.
Holding companies. Holding companies established in the Netherlands with no other activities than the mere holding of shares are allowed to be included in a VAT group together with their subsidiaries, if they carry out “directing and policy-making activities” on behalf of the group.
Cost-sharing exemption. The VAT cost-sharing exemption (VAT Directive 2006/112/EEC Article 132(1)(f) has been implemented in the Netherlands. This provides an option to exempt support services that the cost-sharing group supplies to its members, providing certain conditions are met (in accordance with specific requirements laid out in the Netherlands VAT law).
The supply of services by independent groups of persons to their members can be exempt from VAT in the Netherlands, provided that the group is performing VAT exempt or nontaxable activities, the amount of the recharge to the members does not exceed the amount of costs incurred by the group, the services are directly necessary for the activities of the members and the exemption is not likely to cause distortion of competition. Designated services, including but not limited to the provision of staff- and IT-related services, cannot be exempted from VAT.
Fixed establishment. A fixed establishment is generally understood to be a business establishment in the Netherlands of an entity established outside of the Netherlands, characterized by a suffi cient degree of permanence and a suitable structure in terms of human and technical resources to enable it to provide the services that it supplies and/or to receive and use the services supplied to it for its own needs. A fixed establishment should be capable of acting as a taxable person independently of the head office.
Non-established businesses. A “non-established business” is a business that is not established and that has no fixed establishment in the Netherlands. A non-established business that makes sup plies of goods or services in the Netherlands must register for VAT if it is required to account for VAT on those supplies.
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 “import VAT deferment” facility; see Section E).
Non-established businesses that do not appoint a representative must register at the Tax Office for Nonresident Businesses in Heerlen, at the following address (or electronically, see the Registration procedures subsection below):
Belastingdienst/kantoor Buitenland Postbus 4486 6401 DJ Heerlen Netherlands
Reverse charge. The reverse-charge provision applies generally to supplies of goods and services made by non-established businesses to taxable persons and to 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.
Domestic reverse charge. For certain specific transactions, even if they are carried out between locally established businesses, the recipient of the transaction is liable for the Dutch VAT on the supplies. This applies, for example, to:
• The supply of used material that cannot be reused in the same state, scrap, industrial and non industrial waste, recyclable waste, partly processed waste and certain appointed goods and services
• Supplies of mobile telephones, integrated circuit devices such as microprocessors and central processing units, if the total value of the supply exceeds EUR10,000
• Supplies of telecommunications services between telecommunications services providers
Digital economy. Specific VAT rules apply to cross-border supplies of goods and services sold via the internet (e-commerce) in all EU Member States with effect from 1 July 2021. These new rules apply to all direct sales to nontaxable persons (in practice, these are mostly private individuals), but we refer to these rules as e-commerce VAT rules because most of these transactions are con ducted via the internet. In general, the place of supply is in the country of consumption, i.e., where the goods are shipped to or where the buyer of the goods or services resides, subject to any “use and enjoyment” provisions that may override this rule (see Section B, Effective use and enjoyment subsection above). Therefore:
• For supplies of services made by a nonresident supplier to a business customer (B2B), the busi ness customer is responsible for accounting for the VAT due, using the reverse charge.
• For supplies of goods made by a nonresident supplier to a business customer (B2B), where the goods are transported from another EU Member State, the business purchasing the goods is responsible for accounting for the VAT due, as an intra-Community acquisition. If the goods come from outside the EU, the purchaser may have to report an importation of goods.
• For supplies of goods or services made by a nonresident supplier to a final consumer (B2C), the supplier is generally responsible for charging and accounting for the VAT due at the rate applicable in the customer’s country (unless the supplier’s sales fall beneath the distance selling threshold of EUR10,000 with effect from 1 July 2021). This VAT can be reported using a single VAT registration, using a “One-Stop-Shop” mechanism.
For more details about intra-EU distance sales, see the chapter on the EU.
Effective 1 July 2021, an e-commerce supplier may have a choice of how to account for VAT on its B2C supplies.
Local VAT registration. A nonresident supplier may choose to register for VAT in each Member State and account for VAT on all supplies made and recover input tax in accordance with local rules (see the Non-established businesses subsection above). Non-EU businesses may be required to appoint a fiscal representative for accounting for the VAT due on these transactions.
In the Netherlands, a (general) fiscal representative is mandatory if Dutch VAT applies to dis tance sales and the supplier is not established in the EU.
One-Stop Shop. Effective 1 July 2021, a supplier can choose to account for the VAT due under the EU One-Stop Shop (OSS), which can be used for intra-EU cross-border supplies of goods and all cross-border supplies of services made to final consumers in the EU. Unlike the previous Mini One-Stop-Shop (MOSS) scheme that applied until 30 June 2021, the OSS is not limited to cross-border supplies of electronic services, telecommunication services and broadcasting ser vices.
The OSS is an electronic portal that allows businesses to:
• Register for VAT electronically in a single Member State for all intra-EU distance sales of goods and for B2C supplies of services
• Declare and pay VAT due on all supplies of goods and services in a single electronic quarterly return
The OSS can be used by businesses established in the EU and outside the EU. If a supplier or a deemed supplier decides to register for the OSS, it must declare and pay VAT for all supplies (goods as well as services) that fall under the OSS.
In the Netherlands, businesses can register for OSS via the standard tax portal. There are two portals, one for established businesses (login via e-Recognition) and one for non-established busi nesses, or at least not registered with the Dutch Chamber of Commerce (login via usename and password).
For more details about the operation of the OSS, see the chapter on the EU.
Import One-Stop Shop. Effective 1 July 2021, the Import One-Stop-Shop (IOSS) scheme applies for B2C distance sales of goods from outside the EU.
Effective 1 July 2021, VAT is due on all commercial goods imported into the EU regardless of their value. The actual supply is subject to VAT in the country where the goods are imported (the country of destination). The IOSS facilitates the declaration and payment of VAT due on the sale of low-value goods (i.e., consignments valued at less than EUR150 per consignment). It allows suppliers selling low-value goods dispatched or transported from a non-EU country to customers in the EU to collect, declare and pay the VAT due. If the IOSS is used, the importation into the EU is exempt from VAT. For more details about the IOSS, see the chapter on the EU.
The use of the IOSS special scheme is not mandatory. If VAT is not collected via the IOSS scheme, the importation of goods into the EU is subject to import VAT in the country of final destination, and the Member State can decide freely who is liable to pay the import VAT, which could be the customer or the seller (or an electronic interface).
In the Netherlands, the import VAT can be paid by the supplier if the import is done in its name and on its behalf. If the import is done in the name of the consumer, import VAT is generally paid through the postal services/courier scheme, i.e., by the postal services/courier company.
Postal services and couriers scheme. If the IOSS is not used and the customer is liable for the import VAT due on the supply (and importation) of consignments with a small intrinsic value (i.e., less than EUR150), the VAT can be collected using the special scheme for postal services and couriers.
In the Netherlands, the detail on the special scheme for postal services and couriers on the Dutch Customs Authorities website is still under construction and not yet available.
For more details about the special scheme for postal services and couriers, see the chapter on the EU.
Online marketplaces and platforms. Under the new EU VAT e-commerce rules, effective 1 July 2021, taxable persons that “facilitate” certain B2C sales of goods are deemed to have purchased and then supplied those goods themselves. This means that the single supply from the “underlying” supplier to the final consumer is split into two deemed supplies:
• A supply from the supplier to the facilitator (deemed B2B supply)
• A supply from the facilitator to the final customer (deemed B2C supply). Any intermediation service provided by the facilitator is disregarded for VAT purposes
This provision does not cover all sales facilitated via the facilitator. It only covers distance sales of goods imported from non-EU jurisdictions in consignments with an intrinsic value not exceeding EUR150. The residence of the supplier using the facilitator is irrelevant. The supply to the facilitating platform is VAT exempt and the supplies made by that platform follow the e-com merce VAT rules as described above. In addition, the provision also covers sales within the EU, if the supplier is not established within the EU. This applies to both local shipments within one Member State, as well as intra-Community shipments. In both cases, the final customer must be a nontaxable person.
In the Netherlands, there are no additional specific local rules that apply.
For more details about the rules for online marketplaces, see the chapter on the EU.
Vouchers. The Dutch VAT treatment of vouchers mirrors the EU VAT rules. Regarding face-value vouchers, a distinction is made between single-purpose vouchers (SPVs) and multi-purpose vouchers. A voucher qualifies as an SPV if, at the time of issuing or transferring the voucher, the place of supply of and the VAT amount due regarding the underlying transaction are known. If this is not the case, the voucher qualifies as an MPV. Issuing and transferring SPVs is treated as performing the taxable transaction for which the voucher can be redeemed. The actual redemption is not subject to VAT. This is the other way around for MPVs: issuing and transferring them is not subject to VAT and VAT will become due upon redemption. Other specific VAT rules exist in the Netherlands for transactions involving different types of “vouchers,” such as tokens, coupons and discount vouchers.
Registration procedures. The easiest way to register is to do so online with the Dutch Chamber of Commerce (http://www.kvk.nl/). It is also possible to register directly with the Dutch tax authorities. Registration for non-established businesses can be done by way of sending the completed VAT registration form by post to the tax authorities. The registration form should at least be accompanied by a copy of the deed of incorporation and, depending on individual circum stances, a power of attorney to authorize Dutch contacts. This can be helpful as not all correspon dence will be translated in English or German. Registration usually takes two to six weeks.
Deregistration. If a taxable person is no longer considered to be a taxable person for VAT purposes, they can deregister by sending a letter to the Dutch tax authorities stating that its VAT registration must be ended.
Changes to VAT registration details. Changes in the company address are generally automatically processed via the information available to the Dutch Chamber of Commerce. If the company is not registered with the Dutch Chamber of Commerce, the change in address should be notified to the tax authorities directly. Most changes, including the company name, address and bank account details, can and should be notified using the online portal. In case the VAT status of a company is changing from, e.g., established to non-established, the domestic VAT registration should be converted into a VAT registration at the Heerlen office. There are no time limits or penalties applicable for the untimely or incomplete reporting of changes. However, the company can be held liable for penalties arising from failure to notify, e.g., noncompliance due to not having access to important mail sent to a former company address.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT.
The VAT rates are:
• Standard rate: 21%
• Reduced rate: 9%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services, unless a specific measure provides for a reduced rate, the zero-rate or an exemption.
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 cus tomer established outside the EU.
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
Examples of goods and services taxable at 9%
• Foodstuffs (as goods and as services)
• Books (hard copy as well as electronic publications)
• Paintings and other “cultural goods”
• Entrance to museums, concerts and similar events
• Passenger transport
• Hotel accommodation
The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Supply of immovable property
• Medical services
• Financial services
• Insurance services
• Betting and gaming
• Educational services
Option to tax for exempt supplies. For the supply and letting of immovable property, the supplier and customer can opt for taxation. Several conditions must be met. The most important condition is that the customer use the property for purposes that allow them to 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 prop erty.
E. Time of supply
The time when VAT becomes due is called the “time of supply” or “tax point.” The basic EU VAT rule for determining the time of supply for goods is when the goods are supplied. The basic rule for determining the time of supply for services is when the service is rendered or completed.
In the Netherlands, an invoice must be issued ultimately on the 15th day of the month following the month in which the supply takes place if supplies are made to businesses and in other spe cific cases. The actual tax point is then the date on which the invoice is issued. However, if no invoice is issued or if the invoice is issued late, 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 account ing). If cash accounting is used, the tax point is the date on which the payment is received.
Deposits and 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 it falls due or when it receives the prepayment. The tax point is the date of the invoice. If no invoice has to be issued or is issued too late, the VAT becomes due at the time of receiving the prepayment.
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.
Goods sent on approval for sale or return. There are no special time of supply rules in the Netherlands for supplies of goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above).
Reverse-charge services. For services that are subject to the reverse-charge mechanism, the tax point is the time at which the services are rendered.
Leased assets. For operational leases, the section about continuous supplies of services is appli cable. For financial leases, which are normally treated as the supply of a good rather than a service, the tax point is basically the time the invoice is issued (or should have been issued).
Imported goods. The general rule for determining the tax point 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 that tax point by applying for permission to use the “import VAT deferment” facility. Under this facility, import VAT is reported in the taxable person’s VAT return (and recov ered in the same tax period as input tax, depending on the taxable person’s VAT recovery status, e.g., partially exempt).
A non-established business must appoint a tax representative resident in the Netherlands to use the import VAT deferment facility.
Intra-Community acquisitions. The tax point for an intra-Community acquisition of goods is the date on which the invoice is issued, unless it is invoiced late (i.e., after the 15th day of the month following the month in which the acquisition occurred). In that case, the tax point is the date on which the invoice should have been issued (i.e., the 15th day of the month following the month of the acquisition).
Intra-Community supplies of goods. For intra-Community supplies of goods, the tax point basi cally is 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).
Distance sales. For supplies of distance sales of goods, the tax point is 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).
F. 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 deducting it from output tax, which is VAT due on supplies made.
Input tax includes VAT incurred on invoices for 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 goods and services (see the chapter on the EU).
The time limit for a taxable person to reclaim input tax in the Netherlands is five years. Where input tax is not claimed in the respective period, it may still be reclaimed retrospectively within five calendar years.
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 by a business for private use). 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, or for the purchase of food and beverages supplied in a restaurant, bar, hotel or similar to persons that are staying there for a short time. If the goods or services are used for private purposes, in specific situations, the business is deemed to make a supply of goods or services and output tax is due.
Examples of items for which input tax is nondeductible
• Private expenditure
• Business gifts (if the value exceeds EUR227 per recipient per year and the recipient cannot recover the input tax in its own right)
• Restaurant drinks and meals
• Home telephone costs
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 tax in their own right)
• Business entertainment (subject to the limit of EUR227 a year on employee expenses)
Partial exemption. Input tax directly related to making exempt supplies is generally not recover able. 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.” Supplies that are exempt with credit 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 tax that may be directly allocated to taxable and to exempt supplies. Input tax directly allocated to taxable supplies is 100% 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. This takes place via the “pro rata” calculation. The pro rata calculation is a calculation that is normally based on the
percentage of the values of taxable and total supplies made in the period of a financial year. 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, based on the actual use of goods and services.
Approval from the tax authorities is not required to use the partial exemption standard method or special methods in the Netherlands.
Capital goods. Capital goods are assets of capital expenditure that are used in a business over several years. Input tax is deducted in the financial year in which the goods are acquired or first used (if this is a later year). The amount of input tax recovered depends on the taxable person’s partial exemption recovery position in the financial year of acquisition or first use. 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 nine years after the year of first use
• Movable property subject to depreciation for income tax purposes: adjusted for a period of four years after the year of first use
The adjustment is applied each year following the year of first use, 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 tax, 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 previously deduct ed amount for that specific year).
In the Netherlands, the capital goods adjustment does not apply to any services.
Refunds. If the amount of recoverable input tax in a period exceeds the amount of payable output tax 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.
Pre-registration costs. Input tax on pre-registration costs is deductible as long as the (future) tax able person can demonstrate that the goods or services were used 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. No specific time limits apply, other than the statute of limitations of five years.
Bad debts. When the payment of a debtor is not expected to be received anymore, the VAT that was due on this payment can be reclaimed. VAT related to bad debts aging for 12 months can automatically be reclaimed in the regular VAT return. No separate refund request is required. If the bad debt for which VAT was reclaimed is (partially) paid by the debtor anytime in the future, the taxable person receiving the (partial) payment has the obligation to remit the reclaimed VAT (partially) to the authorities.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in the Netherlands.
Input tax directly related to noneconomic activities is generally not recoverable. If a taxable person performs both economic and noneconomic activities, it may not be able to recover input tax in full. This method of calculating the deductible proportion in such situation is referred to as “pre-pro rata.”
In the Netherlands, the amount of input tax that a business involved in economic and noneco nomic activities may recover is calculated in the following two stages:
• The first stage identifies the input tax that may be directly allocated to economic and noneco nomic activities. Input tax directly allocated to economic activities is deductible according to the partial exemption rules as outlined above, while input tax directly related to noneconomic activities is in principle not deductible.
• The second stage identifies the amount of the remaining input tax (for example, costs relating to the business as a whole) that may be allocated to economic activities and hence recovered. This takes place via the “pre-pro rata” calculation. The pre-pro rata calculation is a calculation that cannot always be based on the percentage of the values of economic and noneconomic activities, as not all noneconomic activities are remunerated. The pre-pro rata calculation is a topic of many discussions with the tax authorities in the Netherlands.
The adjustment is applied each year following the year of first use, 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 tax, 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.
G. Recovery of VAT by non-established businesses
The Dutch tax authorities refund VAT incurred by businesses that are neither established nor registered for VAT in the Netherlands. Non-established businesses may claim Dutch VAT to the same extent as VAT-registered businesses.
EU businesses. For businesses established in the EU, refunds are made under the terms of EU Directive 2008/9/EC. The VAT refund procedure under the EU Directive 2008/9 may be used only if the business did not perform any taxable supplies in the Netherlands during the refund period (excluding supplies covered by the reverse charge). For full details please see the chapter on the EU.
Please find below specific rules for the Netherlands:
• Under EU Directive 2008/9/EG, the EU tax authorities of the country where the VAT was paid must decide upon the request for a refund within four months after the date of the refund claim. In case of a positive decision, the EU tax authorities of the country where the VAT was paid are required to repay the VAT within 10 days following the date of the decision. 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.
Non-EU businesses. For businesses established outside the EU, refunds are made under the terms of the EU 13th Directive. For full details see the chapter on the EU.
The Netherlands does not apply reciprocity requirements, meaning that VAT is normally repaid to businesses from all non-EU countries (i.e., no countries are excluded from the refund mechanism).
Please find below specific rules for the Netherlands:
• The formal deadline for refund claims under the EU 13th Directive is 30 June of the year fol lowing 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 minimum claim period is three months, while the maximum period is one year. The mini mum claim for a period of less than a year is EUR400. For an annual claim, the minimum amount is EUR5.
• Applications for refunds of Dutch VAT must be sent to the following address:
Belastingdienst/kantoor Buitenland P.O. Box 2865 6401 DJ Heerlen Netherlands
• The Dutch VAT authorities have committed to make refunds within six months after the date on which the claim is submitted for the refund.
Late payment interest. No interest (on arrears) is payable by the tax authorities in the Netherlands to non-established businesses requesting a refund of VAT. However, if a VAT refund is granted and a (negative) assessment is sent, but the actual refund is not made within six weeks thereafter, (negative) collection interest may apply.
H. Invoicing
VAT invoices. A taxable person must generally provide a VAT invoice for all taxable supplies made to other taxable persons, including export supplies and intra-Community supplies.
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).
Credit notes. A VAT credit note may be used to reduce the VAT charged and reclaimed on a sup ply. It must be cross-referenced to the original VAT invoice.
Electronic invoicing. The Netherlands VAT law permits electronic invoicing in line with EU Directive 2010/45/EU (see the chapter on the EU).
Electronic invoicing is allowed in the Netherlands, but not mandatory. No specific requirements apply, as long as the issuer of the invoice ensures the authenticity, integrity and legibility of the invoice. It is not required to use a specific method, e.g., EDI or electronic signature, although these two meet the above requirements by definition. It is not necessary to receive an explicit agreement from the customer to be able to use e-invoicing (they may agree tacitly) and no prior approval from the tax authorities is required.
Simplified VAT invoices. Invoices are not automatically required for retail transactions, unless requested by the customer. However, the issuance of invoices for wholesalers is required.
A simplified invoice may be issued with respect to local supplies where the taxable amount of the supply is less than EUR100. Also, for credit notes, a simplified invoice may be issued.
Simplified invoices should at least mention the following details:
• The date of issue
• Identification of the taxable person supplying the goods or services
• Identification of the type of goods or services supplied
• The VAT amount payable or the information needed to calculate the VAT amount
• Where the invoice issued is a credit note, a specific and unambiguous reference should be made to the initial invoice and the specific details that are being amended
Suppliers of public transportation services, petrol stations and hotel and restaurant services do not have to issue a VAT invoice. However, VAT recovery is allowed on public transportation tickets and taxi receipts and petrol station receipts (the latter only if the means of payment allows for identification of the purchaser).
Self-billing. Self-billing is allowed in the Netherlands. Both parties involved must agree to selfbilling (there is no prescribed confirmation for this, but it is recommended to do this in writing).
If the supplier on behalf of which the invoice was issued, does not want to accept the invoice
issued on its behalf, it must inform the recipient (the issuer) of its objections. In that case, the invoice loses its status of VAT invoice. The supplier will have to issue an invoice itself unless parties can agree on a way of adjusting the original self-invoice. Beside the standard invoicing requirements, the following applies: each self-invoice must contain a sequential number that uniquely identifies the invoice and, in addition, the self-invoice must contain the references “Self-billing” and “Issued in the name and on behalf of the supplier.”
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, in order to qualify as VAT-free, exports and intra-Community supplies must be supported by evidence that proves that the goods have left the Netherlands. Acceptable proof includes (a combination of) the following documentation:
• For an export, customs documentation, transport documentation, order forms and proof of pay ment 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 docu mentation (such as purchase orders, transport documentation, proof of payment and contracts) as well as a timely filing of the European Sales Listing that includes the transaction
Foreign currency invoices. A VAT invoice can be issued in any currency, but the VAT amount must be indicated in the domestic currency, which is the euro (EUR), using the daily conversion rate published by the European Central Bank.
Supplies to nontaxable persons. Taxable persons don’t have to issue VAT invoices for supplies to private individuals, with the exception of distance sales. Supplies of goods and services to non taxable legal persons are generally required to be accompanied by a VAT invoice. If no VAT invoice needs to be issued, the documents (“invoices”) that are issued do not have to meet any of the VAT invoicing requirements.
Transactions between related parties. In the Netherlands, there are no specific rules for the value for VAT purposes for transactions between related parties. However, the exception to this rule is where a business puts a company car at the disposal of its staff or other related persons. In that case, VAT must be paid on the “normal value” of the supply, which as a general rule is the cost price of the lease (i.e., the installments and other considerations paid). Customs valuation rules apply to supplies between related parties that are subject to an import transaction. In case of import, the taxable amount for VAT purposes is based on the customs value and therefore these customs valuation rules apply mutatis mutandis to import transactions.
Records. Taxable persons are required to keep record of all taxable supplies of goods and ser vices, intra-Community acquisitions and imports, as well as all other data that are relevant for tax purposes, in the Netherlands or elsewhere in the EU. Furthermore, businesses are required to keep record of goods owned that are shipped to another EU Member State temporarily (e.g., for repair), as well as goods that are shipped to another EU Member State under the simplified calloff stock regime.
It is not required for the records to be kept in the Netherlands, but all records should be made available to the tax authorities upon request within a reasonable time frame.
Record retention period. Taxable persons must retain invoices and all other documents/records that are relevant for VAT for a period of at least for seven years. For invoices and other records/ documents related to real estate, a taxable person must retain these for a period of 10 years.
Electronic archiving. Documents that are not originally in electronic form may be converted to a digital format, as long as the business can guarantee the authenticity, the integrity and the legibility of the documents. Businesses must decide for themselves how they do this. In practice, the
Dutch tax authorities do not issue written approval of a system used by a business for this pur pose. Also note that businesses will have to keep certain documents in their original form, such as documents that determine the amount of duties due upon importation or exportation, e.g., certificates of origin of goods.
I. Returns and payment
Periodic returns. VAT returns are submitted electronically in the Netherlands. They are submitted for monthly or quarterly periods, depending on the amount of VAT payable.
As a main rule, VAT returns must be filed quarterly. Filing the VAT return on a monthly basis can be requested by the taxable person at the tax authorities. If the VAT due is not paid in time, the tax authorities also may require the taxable person to file the VAT returns monthly. 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 before the last business day of the second month after the reporting period.
Periodic payments. The VAT due must be paid by the same date as the VAT return submission deadline, i.e., the last day of the month following the end of the reporting period.
Non-established businesses registered for VAT in Heerlen must pay the VAT due before the last business day of the second month after the reporting period.
The VAT amounts due must be paid in EUR and via (international) bank transfer, using a spe cific payment reference number provided when submitting the VAT return or can be derived via an online tool provided by the tax authorities. Cash, credit card or check payments are not accepted.
Due to COVID-19, businesses in financial trouble can request deferral of payment of VAT (excluding import VAT) with a standard payment deadline before 1 February 2022. Outstanding debts as a result of this payment deferral have to be paid back in monthly installments within five years, starting from 1 October 2022. Ahead of and during the repayment period, collection interest will gradually increase back to the previous rate of 4%, from the current reduced rate of 0.01%.
Electronic filing. Electronic filing is allowed in the Netherlands, but not mandatory. When analog data is transformed into digital data, it needs to be guaranteed that the data is transferred one-onone. 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 specifically that a backup will have to be made regularly.
Payments on account. Payments on account are not required in the Netherlands.
Special schemes. Small and medium enterprises. Such businesses can apply to be exempt from filing VAT returns and issuing invoices if their annual turnover is less than EUR20,000.
Supplies of art, antiques and secondhand or used goods. Such businesses that trade in these goods on a regular basis account for VAT on the margin instead of the full sales price, where they cannot deduct VAT included in their purchase price and where special invoicing rules apply.
Investment gold. Special VAT rules apply to transactions regarding investment gold.
Tour operators. Special VAT scheme applies to tour operators (the “Tour Operator Margin Scheme” or “reisbureauregeling”), which resembles the margin scheme for used goods, art and antiques but also has special rules for determining the place of supply and some other specifics.
Fish. In the Netherlands, the importation of fish, shellfish, crustaceans and mollusks that are brought in by ships returning from fishing, as well as the supply of these animals to auctions are VAT exempt with credit.
Cash accounting. The Netherlands operates a cash accounting scheme, for retailers and compa rable businesses. Under this system, an input tax deduction is allowed, even before the effective payment of the consideration.
Annual returns. Annual returns are not required in the Netherlands.
Supplementary filings. Intrastat. A taxable person that trades with other EU countries must com plete 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 2022 calendar year is EUR5,000,000. The threshold for Intrastat Dispatches for the 2022 calendar year is EUR1 million.
The Intrastat return period is monthly. The option to file the Intrastat return on an annual basis was canceled as of calendar year 2022.
The submission deadline is the 10th day following the return period. Intrastat declarations must be completed in EUR and submitted via IDEP+. Import templates are available on the website of the Dutch Central Bureau of Statistics.
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 per son 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 (B2B) 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.
Correcting errors in previous returns. Errors in previous returns that involve an amount of VAT less than EUR1,000 can be included in the current periodical VAT return. If the VAT amount involved exceeds EUR1,000, the error must be corrected by way of a separate supplementary VAT return. Dutch law requires a taxable person to file a supplementary VAT return as soon as it establishes that an original VAT return was filed incorrectly (i.e., VAT was either underpaid or overpaid). This supplementary VAT return must be filed electronically using a specific elec tronic form. If this is done correctly, this means that no penalties can be imposed, apart from
interest for late payment if there is an underpayment of the VAT. However, failure to file the supplementary VAT return correctly, may result in significant penalties (see Section J. Penalties below).
Digital tax administration. There are no transactional reporting requirements in the Netherlands.
J. Penalties
Penalties for late registration. 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, penal ties may be imposed.
Penalties for late payment and filings. 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 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, intent or fraud, fines ranging from 25% to 100% of the VAT payable may be imposed.
For Intrastat, a penalty up to a maximum amount of EUR16,000 may be imposed for (structural) failure to comply with Intrastat filing and reporting obligations.
For ESLs, 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 penalties apply:
• For the first omission, a fine of 2.5% to a maximum of EUR5,278 is imposed.
• For the second and third omissions, a fine of 5% to a maximum of EUR5,278 is imposed.
• For a fourth or subsequent omission, a fine of 25% to a maximum 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 with systematic errors or omissions.
Penalties for errors. Penalties in the following amounts are assessed for VAT errors:
• For errors in the payment of VAT, the maximum fine is 10% of the VAT due, up to a maximum amount of EUR5,278.
In addition, taxable persons 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 the unpaid tax. This penalty may be imposed if the taxable person knew or should have known that the tax levied fell below the amount that was actually due.
For changes to a taxable person’s VAT registration details, there are no time limits or penalties applicable for the untimely or incomplete reporting of changes. However, the taxable person can be held liable for penalties arising from the failure to notify, e.g., noncompliance due to not hav ing access to important mail sent to a former company address.
Penalties for fraud. Penalties for gross negligence, intent and fraud are assessed for where a tax able person know that errors were made in the payment of VAT and did not notify the tax authorities accordingly, a penalty may be imposed up to 100% 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.
Personal liability for company officers. Directors cannot, in principle, be held personally liable for errors or omissions in VAT returns. However, should VAT due by the company remain unpaid, the director(s) can be held liable in case it can be proven that the fact that VAT remained unpaid is a result of maladministration by the director(s). Directors may enhance their protection against this liability by timely announcing the inability of the company to pay the VAT to the tax author ities.
Statute of limitations. The statute of limitations in the Netherlands is five years. Dutch tax authorities can review and correct VAT returns up to five calendar years. Taxable persons can (volun tarily) correct errors in previous VAT returns also up to five calendar years. However, if the correction results in a refundable amount of VAT, the correction is treated as a VAT refund request that was filed late (i.e., outside of the standard appeal period of six weeks following the VAT payment). This status has impact on further procedural rights and obligations for the taxable person.
An active information obligation exists in the Netherlands. That means that taxable persons are legally mandated to report and correct historic errors in their VAT returns (in the past five years) as and when these are detected. Corrections must be done without delay and penalties apply to taxable persons not reporting these corrections (in time).