VAT (Belasting over de Toegevoegde Waarde, or ‘BTW’ – also colloquially referred to as omzetbelasting or ‘OB’) is therefore applicable in the Netherlands.
VAT in the Netherlands and EEA more generally is an extremely complex part of an already extremely complex tax framework. We strongly advise that you obtain comprehensive advice before making any decisions around corporate structuring.
Dutch VAT Rates
The standard rate of VAT is 21%.
The reduced rate of VAT is 9% and applies to certain items considered ‘necessary’ such as e-books, trainings and some energy-saving purchases for buildings.
The 0% rate of VAT applies to multiple categories of transaction, primarily intra-EU B2B supplies, supplies of goods outside the EU, and domestic supplies of foreign entrepreneurs.
Under certain circumstances intra-EU B2C supplies are taxed at the rate of the country to which the supply is made under the One Stop Shop (OSS) regime. This generally applies to eCommerce retailers. The OSS regime replaced the previous Mini One Stop Shop (MOSS) regime which was applicable to digital service providers only.
Fundamentals of VAT
VAT is a tax on consumption, with the end consumer bearing the ultimate burden. Therefore, as value is added through the value chain, VAT is levied by suppliers on their sales which is paid and reclaimed by their customers and so on until a sale is made to an end consumer without a VAT registration, who is then unable to reclaim that VAT. As value is added through the supply chain, the amount of VAT levied increases.
As VAT is a tax on consumption, generally the place of supply of the goods or services is of vital importance in determining whether VAT should be charged and if so at what rate. A vast and extremely complex framework of rules, regulations, guidelines and interpretations exists at EU and national level in relation to this.
Foreign versus Local Entrepreneurs
In the first instance, it must be determined whether an entrepreneur with a Dutch VAT number is considered foreign or local (Dutch) for VAT purposes. Very broadly, if the entrepreneur’s place of effective management is in the Netherlands then they will be considered a local entrepreneur for VAT purposes.
This is a vital distinction for VAT compliance. A foreign entrepreneur is generally deemed to be providing services in the country where they are considered to be ‘located’ (where their management occurs) regardless of whether they are a Dutch entity or have a Dutch VAT number. This has implications for a number of aspects, including the ability to reclaim input VAT paid to suppliers.
General Rules
| Transaction | Dutch VAT Treatment Local Entrepreneur | Dutch VAT Treatment Foreign Entrepreneur |
| SALES | ||
| Sale of goods or services to local company with VAT number | VAT charged at 21% or 9% | VAT charged at 0% (Domestic Reverse Charge) |
| Sale of goods or services to local consumer with no VAT number | VAT charged at 21% or 9% | VAT charged at 21% or 9% |
| Sales of goods or services to EU customer with EU VAT number | VAT charged at 0% (Reverse Charge Mechanism) | VAT charged at 0% (Reverse Charge Mechanism) |
| Sale of goods or services to EU customer without EU VAT number | VAT charged at 21% or 9% if no OSS applicable and declare in NL VAT return OR
VAT charged at customer country rate if OSS applicable and declare in OSS return |
No Dutch VAT charged or declared in Dutch VAT return OR
VAT charged at customer country rate if OSS applicable and declare in OSS return |
| Sale of Goods to non-EU customer | VAT charged at 0% and declare in Dutch VAT return | No Dutch VAT charged or declared in Dutch VAT return |
| PURCHASES | ||
| Purchase of goods or services from local company with VAT number | VAT reclaimed from NL tax authority on VAT return OR
Fictitious sale declared as domestic recharge with ficitious VAT and reclaimed from NL tax authority on VAT return if domestic recharge applies |
Supplier should charge VAT based on deemed country of VAT residence. No declaration in Dutch VAT return. |
| Purchase of goods or services from EU supplier | Declare fictitious sale on Dutch VAT return and fictitious VAT output, and reclaim input in same VAT return under the reverse charge mechanism | Supplier should charge VAT based on deemed country of residence. No declaration in Dutch VAT return. |
| Purchaser of goods or services from non-EU supplier | Declare fictitious sale on Dutch VAT return and actual import VAT or fictitious output VAT (for services) and reclaim input in same VAT return under reverse charge mechanism | Supplier should charge VAT based on deemed country of residence. Actual NL import VAT may be reclaimed on NL VAT return for import of goods. |
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Special Situations
In addition to the general rules above, specific rules exist for certain transactions such as:
In addition, certain entity types have special VAT regimes that they may elect to apply – for example, travel companies may choose to apply the Tour Operator Margin Scheme (TOMS), whereby output VAT is charged on the (expected) margin of a trip rather than the gross sales.
Distance Selling
Distance selling is the selling of goods or services from one EEA country to consumers in a different EEA country. This is typically applicable to eCommerce and telecommunications, for example.
Where distance sales of a product or service to any EEA country other than an entity’s home country exceeds €50,000 in a tax year that entity must charge VAT at the rate applicable in the country where the customer is resident. The selling company must register for One Stop Shop (OSS) VAT and in addition to their Dutch VAT return, must complete an OSS return declaring all applicable sales per country as well as the VAT charged on those sales. The VAT must be paid to the Dutch tax authorities.
Certain items are exempt from VAT, such as insurance and education. Whilst this is technically 0%, the difference arises in the ability to reclaim input VAT – companies making wholly exempt supplies may not reclaim any input VAT paid.
Where OSS is not applicable (the €50,000 threshold is not breached in any EEA country) VAT must be charged at the applicable Dutch rates as if it were a local (domestic) sale, and should be declared on the Dutch VAT return.
EC Sales Listing
For all B2B sales to other EEA countries subject to the Reverse Charge Mechanism, an entity must submit a supplementary declaration in addition to the VAT return called an EC Sales Listing (Intracommunitaire Prestaties or ICP in Dutch). This must provide a breakdown of total sales value per VAT number, and must tie back to the total declared in box 3b in the Dutch VAT return.
Intrastat Return
The intrastat return is a statistical return that may be requested by the Dutch government. It provides the same information as the EC Sales Listing with a far greater degree of granularity and detail.
VAT Administration
The Netherlands is unique in that there is no turnover threshold which triggers the requirement to register separately for VAT. Upon incorporation and registration of an entity at the Chamber of Commerce, the Dutch Tax Authorities will automatically determine whether or not an entity is liable for VAT and provide a VAT registration number if so.
The decision of the Tax Authority may be appealed, should an entity feel it is incorrect.
VAT returns in the Netherlands are generally submitted quarterly based on a calendar year. For example, the first quarter return covers January to March and must be submitted by 30 April each year. Any liability should be paid by submission date as well.
In certain circumstances the Tax Authorities may determine that monthly VAT returns should be submitted, for example where the sale of goods generates revenues in excess of €50,000 per month.
EC Sales Listings should be submitted within 6 weeks of quarter end.
Errors may be corrected via the filing of a supplementary return (Suppletie). Supplementary returns can be submitted up to five years after the initial return(s) covered, and may cover one or more periods. For example, four quarterly returns all containing errors may be corrected by one supplementary return for the entire year.
OSS returns should be filed by the end of the month following the reporting period in the same way as the standard VAT returns.
No supporting documentation is required to be submitted with any return. However, supporting documentation must exist by law and may be requested by the Tax Authorities in the event of an audit (controle).
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