The Value Added Tax (VAT) system in the Netherlands

The Dutch VAT is an indirect tax levied through withholding by entrepreneurs who sell goods, deliver services, or import goods into the Netherlands. The VAT due is generally mentioned on the invoice, which functions as the cradle for the levy of VAT in the Netherlands.

The VAT rules are harmonized in all European Union member states, based on EU Directives and Regulations, and guarded and, if necessary, enforced by the EU Court of Justice. The EU rules leave the members space for variable options for implementation, and certain aspects like VAT rates are left to the discretion of the member states. The VAT regimes in the EU are similar in core but can differ in parts.

In this publication, we elaborate on various aspects of the Dutch VAT system that are particularly relevant for multinationals and other companies with high exposure to cross-border transactions, such as e-commerce companies, export/import companies, etc.

 

How does the VAT work in the Netherlands?

The Dutch VAT is a consumption tax that is supposed to be borne by the designated end-user, usually the consumer, but also be a Dutch or foreign company that is not entitled to a refund of input VAT.

VAT is charged on account of the sale of goods, the supply of services, or the import of goods into the Netherlands by parties who act in the context of an enterprise unless the sales, supplies, or imports are zero-rated or VAT-exempt.

VAT is included in the retail price of basically all goods and services. Generally, VAT must be included on the invoice issued by the supplier of goods or services. This means businesses function as the withholding agent for the Dutch tax authorities concerning VAT.

Although VAT is a consumer tax, it is charged throughout every stage of the supply chain. This means that, generally, every invoice issued by a business - irrespective of what step in the supply chain - should include VAT, and every invoice a business receives includes VAT. Effectively, VAT becomes then due over the value added by each entrepreneur in the chain.

Every entrepreneur that sells goods or provides services subject to VAT is entitled to a refund or credit for the input VAT. Effectively, VAT is not supposed to constitute a cost between entrepreneurs but merely a temporary cash-flow difference. This is, however, not always the case, for instance, for pure holding companies generally not qualifying as VAT entrepreneurs or for companies that provide VAT-exempt services, which are in most cases only allowed to refund input VAT to the extent they provide services or sell goods which are subject to VAT.

Who is subject to VAT?

Any person, company, or legal entity conducting a qualifying enterprise in the Netherlands should register for VAT purposes, charge VAT on its services and supplies, and periodically pay the withheld VAT to the tax office.

A qualifying enterprise is anyone who performs commercial activities in the Dutch marketplace. It is required that this is done against remuneration, but there does not necessarily need to be a profit objective. For the levy of the VAT, the place of residence of the person/company/entity is not conclusive; if the place of the entrepreneurial activities is in the Netherlands, the Dutch VAT is due, regardless of whether it concerns a corporation incorporated under Dutch law or an entity incorporated under foreign law with a branch in the Netherlands.

By law, practicing an independent profession and the exploitation of an asset with a profit motive are also considered a qualifying enterprise.

Special attention needs to be given to the VAT position of pure holding companies and companies that only supply VAT-exempt services, such as banks or group financing companies.

The permanent establishment of a foreign entrepreneur

For the levy of Dutch VAT, the concept of a permanent establishment is essential to determine whether an entrepreneur established abroad can be regarded as running a business in the Netherlands that must be registered as such as an entrepreneur for the levying of VAT, and usually also the levying of Dutch corporate income tax.

For the content of the term permanent establishment, reference can be made to the meaning of this term under applicable tax treaties or, in the absence thereof, the meaning according to Dutch domestic tax law.

Typical examples of a permanent establishment are an office, shop, or factory. A permanent representative with sales authority or the authority to negotiate sales contracts can also be regarded as a permanent establishment.

In general, there will be no permanent establishment in the event of a short-term presence in the Netherlands or a presence in the Netherlands without a permanent establishment being available to the foreign business.

If a tax treaty applies, particular activities of an ancillary, preparatory, or subordinate nature to the foreign head office will also be excluded from the definition of a permanent establishment. This could, for example, relate to the storage and display of goods, administration, research, advertising, testing, and the provision of information.

Registration as a VAT entrepreneur

If a person, company, or legal entity qualifies as a taxable person for VAT, it is liable for VAT transactions in the Netherlands and must register for VAT. A VAT number will be issued at registration, and the business will be included in the European VAT number database.

For entities incorporated under Dutch law, this registration process is embedded in the registration process for parties conducting an enterprise in the Netherlands with the Chamber of Commerce for inclusion in the Trade Register. These registrations are connected but do not necessarily give a good outcome for VAT registration. It is, for instance, not uncommon for Dutch corporations to lose their VAT registration because they no longer conduct a material enterprise, or foreign companies need to register for VAT purposes in the Netherlands, even if they do not have a branch registration with the Chamber of Commerce. It may then be necessary that VAT registration is applied for by them or on behalf of the taxpayer.

A new phenomenon in the Netherlands is that it has become increasingly difficult for newly incorporated but foreign-owned and managed Dutch corporations to obtain a Dutch VAT number. If there is no actual presence of the corporation in the Netherlands and no actual business activities are (yet) being carried out in the Netherlands, the Dutch tax authorities tend (not always) to take the standpoint that there is no business activity in the Netherlands and therefore refuse to issue a Dutch VAT number or at least postpone the issue of the VAT number until the moment the B.V. starts to carry out transactions in the Netherlands.

Also, a VAT entrepreneur residing in a non-EU country without a taxable branch in the Netherlands may have to register as a non-resident entrepreneur. This can be required if the foreign business becomes subject to Dutch VAT for the sale of goods, a supply of services, or the import of goods without the VAT to be deferred to the customer. This also includes the situation in which a foreign company organizes events or conferences in The Netherlands for which admission fees are charged. Finally, registration as a foreign company for Dutch VAT is also a precondition for obtaining a periodical refund of Dutch input VAT, to which non-EU entrepreneurs are generally entitled within the standard parameters. This will require a request for a refund to be filed periodically.

VAT Group Treatment

Under certain conditions, legally independent businesses that are closely connected in a financial, economic, and organizational manner will be treated as one single taxable person for the levy of VAT.

The VAT group will be regarded as one single taxpayer, and transactions between the various members of the VAT group are considered recognized as such for VAT purposes and thus not subject to VAT. A similar facility for Group Treatment (fiscal unity) exists, but this is a separate regime with its own conditions and rules.

Fiscal representative

Non-resident entrepreneurs without a Dutch subsidiary or registered branch (permanent establishment) in the Netherlands can appoint a Dutch fiscal representative to comply with its administrative obligations arising from the Dutch VAT laws. In certain situations, this is even obligatory.

The fiscal representative must have a license from the Dutch tax authorities. This can either be a “general license” or a “restricted license”.

In the case of a general license, the fiscal representative can represent the foreign entrepreneur for all deliveries and services for which Dutch VAT is charged for intra-community acquisitions and imports. In the case of a restricted license, the fiscal representative can represent the foreign entrepreneur only for imported goods and the subsequent delivery of these goods.

The fiscal representative is jointly liable for the VAT that the foreign entrepreneur can (worst case) become due to the Dutch tax office. For this reason, they must place security with the tax office, either in cash or through a bank guarantee. This is a precondition for obtaining the license.

The required amount of security depends on the nature of the transactions, the expected transaction volume, and the maximum amount of VAT that can become due.

Per license, the security is 5% of the assessed maximum VAT exposure. For trade/import of bulk goods, semi-finished products, and production resources, a security between € 5,000 and € 100,000 must be provided. For trade/import of consumer goods, a security between € 5,000 and € 500,000 must be provided.

What is the subject of VAT?

In the Netherlands, VAT is imposed on the delivery of goods, the supply of services, or the import of goods by parties who qualify as VAT entrepreneurs. These are the main categories.

In the EU, the destination principle has obtained a prominent position in the VAT levy. In most cases, in a B2B's deliveries of goods or supplies of services, the VAT is due in its country, and the actual levy of payment of this VAT is also deferred to the customer (reverse charge). This means that for Dutch-based customers, Dutch VAT can become due to a so-called intra-community acquisition of goods or services from a VAT entrepreneur in another EU country. This can also happen to a legal entity not qualifying as a VAT entrepreneur.

A similar regime can apply for certain B2C transactions, be it that the VVAT is not shifted to the designated end user but stays with the VAT entrepreneur delivering the goods or providing the service. This regime particularly applies to so-called distance sales (whereby the seller arranges the transport of the goods to the client) and certain electronic services.

In certain situations, as defined by law, special rules may apply to determine where services or deliveries are subject to VAT, such as the sale or leasing of means of transport or services connected to real estate.

As a general rule and subject to certain conditions and formalities to be fulfilled, goods delivered to clients outside the EU (export) and services provided to clients outside the EU are not subject to VAT in the Netherlands.

Import of goods

In VAT terms, “import” is a technical term and is understood to be the physical act of bringing goods from a non-EU country into the Dutch jurisdiction by sea or air freight or by shipment over land.

Importing goods into the Netherlands is subject to VAT upon import. Unless a special regime applies, VAT must be paid when the goods are cleared at customs. For instance, goods are kept in a bonded warehouse, a VAT warehouse, or if the importer has a so-called Article 23 license.

Bonded warehouse

There are several possibilities to use bonded warehouses, depending on the type of goods stored, the duration, location, and security. A permit must be obtained from Dutch Customs to keep goods in a bonded warehouse. 

As long as goods are kept in a bonded warehouse, physically and administratively, in technical terms, there are no imports into the Netherlands. Hence, there is no levy of VAT and customs duties (yet).

VAT warehouse

The concept of VAT warehouses is comparable with a bonded warehouse but only applies for VAT purposes. It is available for bulk goods not intended to be released for private consumption without further processing not yet packaged for consumption, typically including mineral products (like oil), agricultural commodities (like grain), and certain chemical products.

No Dutch VAT becomes due, provided the goods are kept in the VAT warehouse.

A list of qualifying bulk goods is published annually.

Deferment of import VAT (art 23 license)

The Netherlands provides a special regime that allows the deferment of actual payment of import VAT at the time of import. This regime must be applied for in advance, and if rewarded, it is generally referred to as “the Article 23 license).
When the importing party has the Article 23 license, it does not need to pay VAT when the goods are imported into the Netherlands and cleared at customs. The import VAT is to be declared in the regular VAT return and can be claimed back in the same return so that no VAT needs to become payable. The VAT levy is then effectively deferred to the next transaction in the chain, and it will depend on the nature of this transaction whether or not any VAT becomes due in the Netherlands. If the goods are sold to a VAT entrepreneur in another EU country, the reverse charge mechanism may result in no VAT being payable.

One condition for obtaining the Art 23 license is the existence of a VAT-taxable person in the Netherlands, be it a corporation incorporated under Dutch law or a Dutch branch of a corporation incorporated under foreign law.

The import scheme for distance sales by non-EU entrepreneurs

Entrepreneurs who have their residence outside the EU and do not have a subsidiary or permanent establishment in the Netherlands but who import goods into the Netherlands in the content of qualifying distance sales may apply for the so-called Import Scheme that provides for an exemption from import VAT for ‘low-value goods,’ referred to as the Import Scheme.

The Import Scheme is also relevant for “fictitious sales” by e-commerce platforms: VAT withholding and payment liability for electronic interfaces (marketplaces or platforms) as deemed suppliers of goods to customers in the EU by entrepreneurs using the marketplace/ platform for the sale of goods with a value of less than € 150.

The exemption can be applied to “low-value goods" with an intrinsic value not exceeding € 150.

Excluded are exercise goods, such as beer, wine, and tobacco.

For assessing the € 150 threshold, the cost of insurance and shipping can be excluded.
The € 150 threshold should be applied per shipment, i.e., a package containing different goods shipped with a single transport document.

If the Import Scheme is not applied, import VAT is due and payable in the country of import. This import VAT is essentially refundable because it concerns distance sales. VAT will become due in the country of the customer or the Netherlands if the Union Scheme is applied.

To access the Import Scheme, the non-EU entrepreneur must register in the Netherlands through an intermediary established in the Netherlands, like a tax advisor or accountant. This representation is something different than a fiscal representative.

With the Import Scheme, the intermediary submits monthly VAT returns for the relevant sales and pays the VAT due on behalf of the entrepreneur.

The intermediary files the VAT returns and makes the VAT payments to the tax office on behalf of the foreign entrepreneur but has no liability for the tax debts of the foreign entrepreneur.

Reverse charge mechanism for non-EU suppliers of services

If an entrepreneur established outside the EU supplies B2B services to a Dutch entrepreneur, Dutch VAT becomes due by the Dutch entrepreneur as the recipient of the services (reverse charge mechanism). The Dutch VAT due is then levied through self-assessment from the Dutch entrepreneur, who should report this VAT due in its regular VAT return. In the same tax return, this VAT can, within the normal parameters, be claimed back as input VAT.

A similar rule applies to legal entities that do not have a VAT number; The Dutch VAT can become due and payable by the legal entity.

Leasing

Like in most countries, leasing is separate from the Dutch VAT system.

There is extensive policy about the qualification of leases, and special rules can apply to specific situations.

Essentially, a lease can be treated as either a delivery of goods or a rendering of services. If, according to specific criteria, the lease qualifies as a finance lease, the lease will be considered a delivery of goods for Dutch VAT purposes. In other situations, the lease will be a supply of services.  

Various criteria must be met to qualify for a lease as a finance lease. The legal criteria are aimed at determining the beneficial owner of the asset.

Margin scheme for used goods

If an entrepreneur qualifies as a trader in margin goods, the entrepreneur can, under certain conditions, apply the so-called “margin scheme.” VAT is not calculated over the gross sales price, as is customary when levying VAT, but on the difference between the sales price and the purchase price, the margin. If the margin is positive, only this margin is subject to VAT, but if the margin is negative, no VAT can be reclaimed.

Marginous goods are goods purchased by an entrepreneur without VAT. Under certain conditions, this may also apply to art, antiques, and collectibles purchased or imported with VAT.

A condition for applying the margin scheme is that the VAT has not been deducted before, so only purchases made by someone unable to subtract the VAT themselves during the purchase, manufacture, and breeding of the goods can qualify.

Special rules apply to the application of the margin scheme for almost all new vehicles, precious metals, gemstones, and margin goods that the entrepreneur has used.

The EU reverse charge mechanism

In most cases, B2B deliveries of goods or supplies of services between VAT entrepreneurs in the EU are subject to VAT in the country of the customer, and the actual levy of payment of this VAT is also deferred to the customer (reverse charge). The invoice does not state VAT but “reverse charge” instead.

The EU reverse charge mechanism may be applied when the customer’s EU VAT is made available, validated in the EU Database, and included as such in the EU Sales Listings that must be filed quarterly, separate from the regular VAT return. EU VAT numbers can be validated in the EU VIES system, a database that stores the EU VAT numbers of all VAT entrepreneurs.

To apply the reverse charge mechanism to the delivery of goods, it is required that the goods are transported from one EU Member State to another Member State. A Dutch company applying the reverse charge mechanism for a supply of goods is required to have proof on file that evidences the transport of the goods from one EU Member State to another EU Member State. This proof should always consist of at least two supporting documents drawn up independently, for example, a signed CMR and the transport insurance policy for the respective supply of goods. If the customer arranges the transport, the Dutch corporation should obtain a written statement from the buyer confirming the required proof. 

Intra–community transfer of goods

When a Dutch company transports goods to another Member state, the Dutch company should declare a (fictitious) intra-community supply in the Member State of departure and a corresponding intra-community acquisition in the Member State of arrival. The subsequent sale or delivery of the goods to the customer is a supply subject to VAT again in the country where the transport starts unless it concerns a supply that qualifies for application of the reverse charge mechanism itself.

This regime also applies to call-off stock, whereby the Dutch company transports goods to a warehouse/stocking location in another EU Member State, where the customer can pick up the goods. Such removal of goods is a domestic supply in the country where the warehouse is located. Technically, it would also be required for the Dutch company to register for VAT purposes in the country where the warehouse is and make the necessary VAT filings when a simplified regime or call-off stock can be applied, whereby this is under certain conditions not required. The condition is that the customer picks up the goods within one year. The supply of goods by the Dutch company to the customer is then the only taxable supply in the chain.

A-B-C Transactions

An A-B-C transaction is one in which consecutive sales of the same goods are made while the delivery is made between fewer parties, usually directly from the first party in the chain to the last. 

If there is only one transport from one EU Member state to another, there can only be one intra-community supply. These other supplies are then considered domestic supplies, subject to domestic VAT.

According to the EU rules, the supplier in the chain who arranges or has arranged the transport in their name is considered to make an intra-community supply. The preceding and consecutive supplies are domestic supplies subject to domestic VAT in the countries involved.

E-commerce activities in the Netherlands 

For e-commerce, specific VAT rules must be considered.

Deemed supplies by E-commerce platforms

For a qualifying “distance sale of goods,” the so-called platform fiction assumes that the supplier of the goods delivers to the platform (with either 0% VAT or VAT foreign country), and the platform delivers to the private individual. In practice, the goods may go directly from the supplier to the private individual.

For a qualifying “distance sale of goods,” the so-called platform fiction assumes that the supplier delivers to the platform (with either 0% VAT or VAT foreign country) and the platform delivers to the private individual. In practice, the goods may go directly from the supplier to the private individual.

The platform fiction only applies if the platform 'facilitates” sales, meaning:

• It brings together customers and suppliers offering goods for sale on the platform,
• It has general terms and conditions
• It is involved in the payment of customers and the ordering and delivery of goods

The platform fiction only applies to qualifying “distance sales” of goods imported from outside the EU and delivered within the EU to customers who are not required to file a VAT return for goods valued less than € 150. = or goods sold from a warehouse in the EU by an entrepreneur established outside of the EU, regardless of the value of the goods. 

Sale of goods B2C (distance sales) and the supply of digital services to consumers in the EU.

The destination principle applies to qualifying distance sales and digital services to consumers and designated consumers. These deliveries and supplies are subject to VAT in the EU country where the customer has his residence.

Distance sales

If a Dutch or foreign VAT entrepreneur sells goods B2C whereby the seller arranges for the transport of the goods to the customer (distance sales), and the customer lives in an EU-member state, then according to the EU VAT principles the VAT becomes due in the country of the customer. These rules apply to consumers without a VAT number, like legal entities without a VAT number or entrepreneurs with a VAT number only performing exempt services. In technical terms, this is referred to as “distance sales”.

Digital services

A similar regime applies to qualifying digital services provided to consumers.

Digital services include electronic, radio, and television broadcasting services.

Electronic services are services provided over the Internet or a digital network. These services are largely automated and cannot be delivered without information technology. This typically includes online data storage, access to or downloading software, use of search engines online, SEO services, automated advertisement, traffic information, weather reports, online newspapers and magazines, and online gaming.

Telecommunication services relate to broadcasting, signals, text, images, sounds, or information by wire, radio waves, optical or other electromagnetic systems. This typically includes the right-to-use capacity for such transmission, transmission, or reception, like telephony, SMS, internet access, and voicemail.

Radio and television broadcasting services are services with audio and audiovisual content, such as radio or television programs, which are offered by and under the editorial responsibility of a media service provider based on a schedule via communication networks to the general public for simultaneous listening or viewing.

The starting point is that digital services to consumers are taxed in their resident country. However, for certain digital services, the place where the services are considered to be determined differently, for instance:

• The physical location where the service is provided, for services provided at a specific location, such as a Wi-Fi hotspot, telephone box, internet café, restaurant, or hotel lobby.
• The place of departure of the passenger transport for services provided onboard a ship, plane, or train for passenger transport within the EU.
• The place where the private person's fixed line is installed for services provided via a landline.
• The country code of the private person's SIM card for services provided via a mobile phone.
• The place where the decoder is or the place where the viewing card has been sent if a decoder or viewing card is required for the service.

The entrepreneur can opt to deviate from these exceptions and apply the main rule (VAT in the country of residence) to obtain evidence of the country of residence. This formally requires three (3) non-contradictory means of proof, such as the billing address, bank details, the internet protocol address (IP address), or other business data.

The Dutch VAT regime for distance sales and digital services

The prescribed VAT levy in the country of destination implies that the seller must register in each EU country where it has customers and make regular VAT filing and payments to the local tax authorities.

To avoid heavy administrative burdens for the entrepreneurs, relation and simplifying measures were introduced as a threshold and the possibility to register and file in only one EU country.

The Dutch threshold for distance sales and digital services

The Netherlands provides a threshold for specific treatment sales and services less than EUR 10.000.

Suppose the expected total, including distance sales and digital service country customers in a specific year, does not exceed this amount, with only Dutch VAT being charged and the appropriate VAT filings and VAT payments being made in the Netherlands.  Only if the entrepreneur opts for the “normal” VAT treatment to apply, and in case the expected total value of turnover with distance sales and digital services together exceeds EUR 10.000 for the year, the entrepreneur must charge the VAT of the country of destination, register there, and make the appropriate VAT filings and VAT payments in that country.

The Dutch One-Stop-Shop Regime (OSS)

Under certain conditions, a Dutch or foreign (non-EU) VAT entrepreneur who provides distance sales or digital services for which it is required to register for VAT purposes in the country of its EU customers and to make appropriate VAT filings and VAT payments there may opt for a simplified regime that only requires registration and VAT filings and payment, in one EU country.

The Dutch One-Stop Shop regime (OSS) applies to entrepreneurs established in the Netherlands and outside the EU.

The Dutch One-Stop-Shop Regime (OSS) for entrepreneurs in the Netherlands

A Dutch entrepreneur that provides qualifying distance sales or digital services for which it is required to register for VAT purposes in the country of its EU customers and to make appropriate VAT filings and VAT payments may opt for a simplified regime that only requires registration and making VAT filings and payment, in the Netherlands.

This regime is generally referred to as the One-Stop-Shop regime (OSS) regime. This regime is based on EU rules and may be found in all EU member states. The OSS regime is accessible based on the Union Scheme for Dutch entrepreneurs providing qualifying distance sales and digital services.

Dutch entrepreneurs in this context include entities incorporated under Dutch law and Dutch permanent establishments of entities incorporated under foreign law, with a VAT registration and an active VAT number in the Netherlands.

The Union Scheme can only be applied for the direct delivery of goods already in the EU and for which VAT is due in the country of the consumer (distance sales).

Further, the following conditions must be met for applying the Union Scheme in the Netherlands:

• The goods are stored in a warehouse in NL.
• The goods are transported from one EU country to another.
• The customers do not have to submit a VAT return, like private individuals and entrepreneurs who do not have to file a VAT return (inherent to a distance sale).
• Not for “margin goods” and (nearly) new means of transport, such as cars and motorbikes,
  not for ’assembly goods deliveries,’
• The seller is responsible for the shipment of the products (inherent to a distance sale).

The OSS regime requires registration for the use of the OSS portal, and once registered, periodical filings into the OSS portal contain detailed information on the VAT charged and the VAT due in other EU countries. Dutch tax authorities subsequently handle the reporting and settlement of the VAT due in the respective EU countries.

The OSS portal provides the possibility to obtain a refund on input VAT; procedures apply depending on the circumstances of the case.

If the Union Scheme is not applied, the seller must register and declare the VAT in each country where goods are delivered (as distance sales).

The Dutch One Stop-Shop-regime (OSS) for non-EU entrepreneurs

Entrepreneurs established outside of the EU who do not have a subsidiary or permanent establishment in the Netherlands access the OSS regime through the Union Scheme (for distance sales) or the Non-Union Scheme (for digital services).

Under the OSS regime, the foreign entrepreneur must report VAT on all the deliveries and supplies and pay the VAT due every quarter in NL. No refund of input VAT within the Union scheme or Non-Union scheme (separate refund procedure for non-resident entrepreneurs).

Registration for the Union Scheme in the Netherlands is only possible if the non-EU entrepreneur has a warehouse (or a permanent establishment) in the Netherlands.

Entrepreneurs established outside the EU usually combine the application of the Union regime in the Netherlands with the application of the Import Scheme, which provides an exemption of import VAT for qualifying low-value goods (<€ 150) under certain conditions. Application for the Import Scheme needs intermediary representation in the Netherlands. The equivalent of the Union Scheme for the (distance) sale of goods is the Non-Union Scheme for the supply of digital services, which relates to the supply of services to customers in the EU, for which VAT is due in their country (digital services).

The essential characteristic of a digital service is that the customer does not submit a VAT return, like private individuals, entities who do not have to file a VAT return, or entrepreneurs who only provide VAT-exempt services.

The non-EU supplier of the services may choose which EU Member State it wants to register and will have to report VAT on all the supplies and pay the VAT due every quarter in this EU Member State only.

There is no possibility to obtain a refund on input VAT through the Non-Union scheme (non-resident entrepreneurs use a separate refund procedure).

If the Non-Union scheme and Union Schema are not applied, the supplier must register and declare the VAT in each country where the goods are sold and services are supplied.

The export of goods

In VAT terms, “export” is a technical term and is understood to be the physical or administrative act of bringing goods from The Netherlands to a non-EU country by sea or air freight or by shipment over land.

Also, the intention to export can qualify under certain conditions, which may include a domestic sale of goods to export.

When goods are physically located in the Netherlands but have not yet been imported, for example, because they are “stored” in a bonded warehouse or a VAT warehouse, exporting means that the goods will never come under the Dutch VAT jurisdiction. There is no export (there has been no import yet), and the “export” of the goods thus has no Dutch VAT implications.

Export is charged with 0% VAT. The right to deduct VAT input remains intact because this is a 0% rate, not an exemption.

There are various administrative requirements for applying the 0% rate for export. The most important one is the ability to prove that the goods have left (transported out) the EU.

The exporter must keep in its administration documents that substantiate the transport of the goods to a non-EU country, like a copy of the consignment, bill of lading, etc.

The 0% rate for export may also be applied to services relating to the export of the goods, like the cost of transport to the point of departure and the subsequent loading and unloading of the goods there.

The Dutch VAT rates

The Dutch standard VAT rate is 21% and applies to most goods and services. The Dutch rate is average in comparison to other EU member states.

A 9% rate applies to certain essential goods and services, for example, food and beverages for human consumption, water, pharmaceutical products, and medical aids for persons and animals, books and magazines, passenger transport, hotel accommodations, entrance for sports events, theatres, cinemas, music performances, zoos, and some labor-intensive repair and maintenance activities, etc.

The law provides an extensive list of goods that qualify for the 9% rate.

A 0% rate applies to some categories of services and supplies, of which the most important ones are:
• Exports, the delivery of goods to non-EU countries,
• EU intra-community supplies,
• Goods not cleared through customs,
• and Cross-border passenger transport by airplane and sea vessels.

Using the 0% rate does not limit the entitlement to recover input VAT.

VAT exemptions

VAT exemptions are available for certain transactions. The following industries and business activities are under certain conditions exempt from VAT:

• Investment gold
• Collective advocacy
• Composers, writers, cartoonists, and journalists
• Financial services and insurance
• Fundraising activities
• Healthcare
• Youth and youth work
• Games of chance
• Canteens
• Childcare assets
• Lectures, excursions, and guided tours
• Education
• Real estate (sale and lease, unless parties opt for taxable VAT treatment)
• Postal services
• Radio and television
• Partnerships (umbrella exemption)
• Socio-cultural institutions
• Sports organizations and sports clubs
• Funeral directors

Companies providing VAT-exempt services and supplying VAT-exempt deliveries of goods are generally not allowed to charge VAT on their invoices and, in most cases, are refrained from recouping input VAT. A noteworthy exemption to this rule is providing financial services (like granting of loans) to parties outside the EU. The services are VAT-exempt but do not limit the entitlement to recoup VAT input.

Generally, a taxpayer is only entitled to recover input VAT if and to the extent it provides services or supplies goods that are not exempt from VAT (pro-rata).

In case a company performs services outside the marketplace (like the provision of interest-free loans within the group), as well as VAT-taxable and VAT-exempt services or supplies, the right to deduct input VAT is limited to the extent that it relates to VAT-taxable transactions only (pro-rata calculation).

There is also a general VAT exemption available for transferring business assets in the context of an (entire or partial) business takeover.

Dutch invoicing requirements

In almost all cases where products are sold/services are rendered in the Netherlands, the seller/ service provider must issue an invoice. Some exceptions to this rule are, for instance, particular cash and carry transactions and small (<€ 100) B2C transactions.

Invoicing requirements are incorporated in Dutch tax law based on an EU directive. This includes the obligation to put the customer’s VAT number on the invoice and provide additional information identifying the VAT liability of certain goods/services.

VAT must be calculated over the remuneration charged for the goods/services. Disbursements typically follow the VAT regime of the underlying expenses, and out-of-pocket expenses can be left out of the taxable basis for the VAT. The remuneration can be paid in cash or in-kind (barter).

The invoice format is more or less not tied down, although some formal invoice requirements are to be considered. Digital invoices are allowed provided certain conditions regarding the software used to generate and send the invoices are met. Furthermore, the authenticity of origin and the integrity of the content of the invoices must be safeguarded. Self-billing is allowed under certain strict conditions.

If there is an obligation to issue an invoice, then the invoice should meet specific requirements. If these requirements are not met, there may be adverse formal and material consequences such as the levy of penalties, the reversal of a reverse charge mechanism applied on the invoice, or the denial of a refund of input VAT of the VAT stated on the invoice.

The invoice needs to state the following information:

1. The full company name and that of the customer: the company's legal name should be stated. A trade name is also allowed if it (in combination with address and city) has been registered as such with the Dutch Chamber of Commerce. For the members of a VAT Group (fiscal unity), it is common practice to state the name on the company's invoice that delivered the goods or supplied the services to the customer.
2. The full address and that of the customer. It should be the actual address or the location of the company, which is usually the registered address. It is not sufficient to mention a P.O. Box.
3. The VAT number of the company. This is the number that starts with ‘NL’. In the case of fiscal unity, the VAT number of the company that delivered the goods or supplied the services to the customer should be mentioned.
4. The Dutch Chamber of Commerce number of the company
5. The date on which the invoice was issued.
6. An invoice number is a consecutive number whereby each number can only be used once.
7. In case products are being delivered: what kind of products and the amounts.
8. In the case of rendering services: what kind of services, the scope of these services, and the period during which they were rendered.
9. The date on which goods or services have been delivered/rendered or the date of a prepayment (if applicable).
10. The amount charged for the products/services excluding VAT.
11. The VAT rate(s) applicable to the products sold or services supplied. If more than one VAT rate is used, the VAT rate per separate item (like a unit price) or groups of items must be stated. When used, the unit price should also be mentioned.
12. The net amount subject to VAT, the applicable VAT rate, and the amount of VAT due
13. Identification of exempt supplies or supplies where the customer has to pay the VAT (self-assessment or "verleggingsregeling")
14. Identification of tax representatives, if used

Invoices sent or received must be added to the company's administration on the form they were sent or received. Digital invoices can be stored digitally.

Invoices (as part of the administration) should be kept for seven years, but then years if they relate to real estate.

VAT returns, payments, and refunds

In the Netherlands, VAT returns must be filed with the tax authority quarterly and sometimes monthly, depending on the size of your business and the height of your VAT payment obligation. For exceptional cases, filing annually is allowed.

In the VAT return, the VAT charged on services and supplies must be reported (output VAT), and the VAT charged to the company can be deducted (input VAT). The balance must either be paid to the Dutch tax authorities or refunded to you by the tax authorities.

The VAT returns must be filed electronically, online directly in the portal of the taxpayer, or by using a designated software program.

The VAT return should be filed, and the VAT due according to the VAT return filed should be paid to the tax office within one month after the end of the taxable period. VAT payments must be made with the designated reference number, or the payment will be ignored.

The Dutch tax office and collector generally work very efficiently and usually process VAT refunds within two to four weeks.

European Sales Listing (ESL)/ or ICP-Declaration  

When a Dutch company provides (fictitious) intra-community services or supplies, it must file the so-called European Sales Listings, or ICP-Declarations, besides the standard periodic VAT return. 

A European Sales Listing can be filed monthly, quarterly, or annually. It must be done monthly when the intra-community services or supplies exceed a certain threshold (2023: more supplies than EUR 50,000 every quarter).

The following services do not need to be included in the European Sales Listing:

1. Intra-community services that are exempt from VAT in the country of the customer,
2. Intra-community services that are taxed at 0% in the country of the customer,
3. Services provided under the ‘one-stop shop’ scheme,
4. Services related to real estate, such as rental and maintenance,
5. Passenger transport,
6. Services related to providing access to events in the fields of culture, art, sport, science, entertainment, or education, for example, musical performances, theater performances, circus performances, 
7. Fairs, sporting events, film screenings, scientific conferences, fairs and exhibitions,
8. Services provided by restaurants and catering companies,
9. Rental of a means of transport for a continuous period of no more than 30 days or rental of a ship,
   for a consecutive period of up to 90 days

The deduction of input VAT

An entrepreneur established in the Netherlands filing a VAT return may deduct the VAT on expenses incurred from the VAT due on supplies and services and the VAT that has become due upon import of goods into the Netherlands.

To deduct the input VAT, it is not required that the expenses and the VAT calculated on them have already been paid, but if it is established that the expenses incurred will never be paid and at the latest after the expiry of one year.

Various limitations apply to the deduction of input VAT.

No VAT deduction can be claimed for, among others, the VAT incurred about:

• Private purchases,
• Food and drinks in the hospitality industry,
• Services that are exempt from VAT,
• Services that are provided free of charge or for a symbolic fee,
• Subsidies on which no VAT has to be paid and
• Employee benefits, gifts, and business gifts (of more than € 227 per person per year),
  services prohibited by law.

Only Dutch VAT can be deducted in the regular Dutch VAT return, and a Dutch entrepreneur can also claim a refund of VAT incurred in other EU Member States, subject to the conditions for deduction in said member states. For this purpose, a separate refund procedure with the Dutch tax office will have to be followed.

VAT refund for foreign entrepreneurs

For the levying of Dutch VAT, an entrepreneur is only regarded as a foreign entrepreneur if the entrepreneur is not established in the Netherlands and has no permanent establishment in the Netherlands.

In principle, a foreign entrepreneur in the Netherlands is not obliged to declare VAT, even though exceptions may arise about specific transactions.

A foreign entrepreneur who is not obliged to declare VAT can reclaim the VAT charged to it from the Dutch tax authorities if:

• The standard conditions for deduction of input VAT are met, and
• The VAT relates to purchased goods or services received in the context of a business and
• These goods and services have been used for the benefit of the supply of goods or provision of services subject to VAT, and the VAT refund amount is at least €50 per calendar year or €400 per quarter.

Goods and services for which the VAT has been transferred to the customer or to which the 0% rate applies can also be regarded as goods and services subject to VAT.

For the procedure to be followed for the VAT refund, a distinction must be made between foreign entrepreneurs established in the EU and foreign entrepreneurs outside of the EU.

Entrepreneurs established in the EU can reclaim Dutch VAT under normal conditions for five (5) years. They should request a refund from the tax authorities of the country of residence.

The foreign tax authorities will then forward the request for the VAT refund to the Dutch tax authorities. Dutch tax authorities will then take over the refund procedure and handle it by the generally applicable rules for VAT deduction and refund.

The Dutch tax authorities aim to process such a refund request within four (4) months. The foreign entrepreneur receives a Decree confirming the (amount of) the refund following processing. If the foreign entrepreneur disagrees with this Decree, it can object. Their payment follows after receipt of the Decree.

Entrepreneurs established outside the EU may be eligible for a refund of Dutch VAT by following a distinct refund procedure. In the first instance, this requires registration as a foreign entrepreneur with the Dutch tax authorities. Subsequently, a periodic request for a refund can be submitted before July 1 of the year following the VAT charge. 

What can we do for you?

We deal with VAT issues about cross-border transactions daily and gladly assist you with our VAT experience and expertise.

Our services could include:

• Registration with the Dutch tax office
• In-depth advice on VAT issues
• Clarifying VAT implications about specific transactions
• Assistance with the preparation of a VAT manual or VAT Control Framework
• Preparation and filing of VAT returns and European Sales Listings
• Preregistration for the one-stop-shop (OSS) regime
• Preparation and filing of OSS returns
• Representation in VAT audits
• Filing VAT-related applications, such as the application for the Article 23 license
• Inform on developments in VAT law, policies, and case law.

If you are interested in our services, contact us via e-mail or call our office in Rotterdam at +31 (10) 2010466 or our office in Amsterdam at + 31 (20) 5709440.