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If anyone is engaged with business in Netherlands or supply goods and services to Dutch customers he has to deal with the Dutch system of Value Added Tax termed as “VAT in Dutch BTW”. It is a all-purpose consumption tax born by the consumer is a general consumption tax, which is supposed to be ultimately born by the consumer. In the Netherlands, turnover tax is generally called VAT. When the term VAT is utilized it refers to Dutch turnover tax.

VAT in Netherlands incorporated in Dutch Tax law is based upon EU Directives keeping the principles and the structure of the tax same in general throughout the whole EU. Member states have the right to settle on their domestic rates and turnover limits for registration.

In Netherlands there are three types of VAT rates. The standard rate of Dutch VAT is 19% applicable to most goods and services. A 6% rate is applied to for example food and beverage for human utilization (except for alcoholics), 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, etc. A 0% rate is applied to exports and intra-community (EU) supplies.

The following criteria should be fulfilled to be liable for Dutch VAT refund.

If you are a non-resident entrepreneur in the Netherlands and engaged in supplying goods or services in the Netherlands, you are liable to pay Dutch turnover tax relating to these goods or services. On the other hand if you are not supplying goods or services in the Netherlands but at the same time incur costs on which turnover tax was charged, you can get back this turnover tax.

When you purchase goods from outside the EU and import these goods to Netherlands then you have to pay VAT for these goods.

If you import goods from a supplier in another EU member state (an intra community acquisition) the goods will be cause to undergo Dutch VAT in general. For supply of goods to customers (entrepreneurs) in other EU member states (an intra community supply) provisionally you are eligible for 0%-rating.

If you buy goods or incur other costs in the Netherlands on behalf of your firm, your suppliers will charge you VAT. You will also need to pay VAT if you import goods into the Netherlands from non-EU countries, or if, acting from an establishment in the Netherlands, you purchase goods from another EU Member State. The VAT you are charged on your purchases and cost is known as 'input tax'. You are entitled to deduct the input tax from the VAT you have to pay in the Netherlands. If the amount of input tax is larger than the amount of VAT you have to pay, you are entitled to a refund of the difference.

The term 'services' refers to all activities, other than the supply of goods, that are carried out on a commercial basis in return for remuneration. The following are examples of services

  • passenger and freight transport;
  • musical and theatrical performances;
  • the granting of licensing rights;
  • the activities performed by management consultants, lawyers and accountants;
  • activities relating to movable or immovable property.

Whether you owe VAT when rendering these services depends on whether the service is rendered in the Netherlands. If it is, you will – in principle – have to pay Dutch VAT

VAT and immovable property in the Netherlands

If you own immovable property in the Netherlands, three situations may occur that are relevant for VAT purposes:

  • letting immovable property
  • selling immovable property
  • letting holiday homes

In the event of a purchase made in the Netherlands of goods from another EU Member State, the VAT charge is based on the amount your supplier charges you. You should convert this figure into euros if it is not stated in euros, using the rate of exchange on the date on which the VAT charge arises.

Special rules apply to holding companies

Dutch invoicing requirements
Per 1 January 2004 new invoicing obligations are included in Dutch tax law which are based upon a EU directive that came into existence per the same date. If you make any transaction by purchasing goods or services in the Netherlands, you will be charged VAT. In order to recover this VAT you have to submit a well defined invoice..  

It is relevant for your business to comply with the invoicing requirements in order to prevent penalties. Furthermore, your customer, being the recipient of an incorrect invoice, may experience difficulties reclaiming VAT on the incorrect invoices it received.

The specific information that you have to include in the invoice 

  • Date of issuance invoice
  • A sequential number 
  • Your VAT identification number 
  • The VAT identification number of your customer (if required by the nature of the supply)
  • Your full name and address as well as the full name and address of your customer
  • A description of the goods and services supplied (second hand goods are to be identified)
  • The quantity of the goods supplied or services rendered
  • The date the goods were supplied or the services were rendered
  • The net amount subject to VAT, the applicable VAT rate and the amount of VAT due
  • Identification of exempt supplies or supplies where the customer has to pay the VAT (self assessment or "verleggingsregeling") Identification of tax representatives when used
  • Additional information identifying the VAT liability of certain supplies/services.

Submission of electronic invoices is allowed subject to the condition that the origin and integrity of the invoice is guaranteed. It is furthermore noted that records are to be kept of copies of invoices for a period of at least seven years. This obligation applies equally to paper and electronic invoices.

In some cases, the invoice should have the customer's VAT identification number. This will be applicable in the case if a business supplies goods to business in another EU country regarding certain related services (including transport services).If a reverse-charge mechanism applies, The customer's VAT identification number must be given in the invoice in case of a reverse-charge mechanism is applied.

In addition, the invoice has to show whether a special VAT facility applies, i.e.:

  • trade in used goods;
  • application of a reverse-charge mechanism;
  • application of a VAT exemption;
  • intra-Community supplies of goods.

VAT refund for foreign entrepreneurs
Foreign businesses without any taxable presence for VAT purposes in the Netherlands are liable to get a refund of the Dutch VAT which they have incurred.

The foreign businesses should file a vat reclaiming request within 6 months from the date of incurring the he VAT. Original invoice should be produced in this case. Detailed conditions are applied for verification that the foreign company is indeed an entrepreneur according to the Dutch definition. The request can be filed once a quarter, once a half year or once a year.

There exist some normal limitations regarding VAT refund. As for example the VAT with reference to meals and drinks is in general not refundable.
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