This Netherlands VAT overview is for entrepreneurs who want to do business in or through the Netherlands and face Netherlands VAT. In the Netherlands and other EU member states sales tax is levied according to the value-added tax system (also called VAT).
Netherlands VAT explained
In the Netherlands and Europe it is compulsory for a business to charge VAT (Dutch: BTW) to its clients on the invoice. The VAT an entrepreneur is charging a client can be offset against the VAT a supplier is charging him. At the end, the rest is paid to the Dutch tax authorities. An important basic rule is that you cannot reclaim any VAT, if you do not charge VAT on your invoices.
Netherlands VAT tax return
Most of the time entrepreneurs file the Netherlands VAT tax return on quarterly basis. However, in case of high turnover it can be changed to monthly or from a cash flow perspective. On the other hand if the turnover is very low, on request the Netherlands VAT tax return can be changed to annually.
The first Netherlands VAT return must always be filed on paper. You can only reclaim paid VAT on goods or services which have been charged to you when it will be used for your activities as an entrepreneur. After the first VAT return, the Dutch tax authorities will send automatically a VAT-assessment with the amount which has been declared by you. Make sure the Netherlands VAT returns are filed on time. Otherwise, penalties will be issued. Also, when you have to pay VAT, pay it on time. The Dutch tax authorities will issue penalties very quick.
Netherlands VAT rate
At the moment Netherlands VAT rate is 21% (standard rate) or a reduced rate of 6% and 0% (for supply in the EU intra-Community supplies and export). For e-commerce special rules apply.
If clients are invoiced, certain invoice requirements must be met. The invoice must contain the date of issue, invoice number, full name and address of you and the client, description of the provided goods/service, Netherlands VAT rate, the amount, chamber of commerce number. In EU situations the EU-VAT number of you and the client abroad must be stated on it.
Permanent establishment (branch) or legal entity in the Netherlands
If you have a permanent establishment in the Netherlands, then the same regulations apply to you as to domestic entrepreneurs. As a result, you need to prepare and file periodically (monthly, quarterly or yearly) a Dutch VAT tax return. If you are not supplying goods and carrying out services as a foreign entrepreneur, but you have incurred costs, then you can apply for a refund of the VAT charged.
A permanent establishment is a place of business in the Netherlands with sufficient facilities for running an independent enterprise. The permanent establishment is part of the enterprise that you have established in a foreign country. The establishment is used for supplying goods and/or services to third parties. A shop or other fixed retail outlet, a workshop or a production plant with an adjoining office are all examples of permanent establishments. A store, a warehouse or an office that is used only for certain support or secondary activities (such as performing research, advertising or distributing information) is not regarded as a permanent establishment.
If a foreign company is not established or registered for VAT in the Netherlands special rules apply.
More info about Netherlands VAT?
Are you established in the Netherlands do you have a permanent establishment or want to reclaim back Dutch VAT or EU VAT? You can contact us through the contact form or you can call us from within The Netherlands at (0)85 0030140 or call us from abroad at +31 (0)20 2615615.
Also see the English website of the Dutch tax authorities.