EU VAT GUIDE – Netherlands

How much is VAT in Netherlands? 

The Standard VAT Rate(”Belasting over de toegevoegde waarde” (BTW)) in the Netherlands is 21%. Some specific goods and services supplies are exempted from the Value Added Tax. 

Some supplies are exempt from VAT. This applies to business activities like education, health care, insurance, and banking services.

VAT threshold in the Netherlands

The Netherlands VAT legislation contains valuable information about  VAT thresholds and applicable provisions. Tax Authority officials’ interpretations of the relevant information are also helpful source of information. 

VAT registration threshold for resident businesses: No registration threshold. 

However, there is a simplified scheme for small business operators who can make supplies exempt from Netherlands VAT, even if those types of supplies are taxable activities. 

An economic operator must fulfill the requirements to take advantage of the simplified regime. Still, the primary ones are that the threshold cannot be higher than EUR 20,000 during the calendar year and that the business is established in the Netherlands. 

VAT registration threshold for non-resident businesses: No registration threshold

VAT registration threshold for intra-EU distance sales of goods and B2C supplies of services: EU-wide harmonized threshold of EUR 10,000

VAT registration threshold for non-EU established suppliers of Electronically Supplied Services: No registration threshold

VAT Taxable Activities in the Netherlands

Economic operators who make supplies of goods and services in the Netherlands for consideration as part of their regular business activities are subject to Netherlands VAT. 

From a VAT perspective, these operators are taxable and should register for tax. Here, we can find natural persons conducting professional activities, legal persons, and entities without legal status.

Types of taxable activities that trigger the imposition of VAT: 

• The supply of goods and rendering of services in the Netherlands for consideration;
• Import of goods; 
• Intra-community acquisition of goods for consideration;
• Export to non-EU countries.

There are also other case scenarios where domestic or foreign businesses should impose Netherlands VAT on their transactions. 

Tax Representative in the Netherlands

In most cases, having a fiscal representative established in the Netherlands for the VAT compliance duties of non-EU established business is not mandatory. However, there are cases where the intermediation of Dutch-based tax representatives is compulsory. This is when the non-EU business conducts distance sales towards customers in the Netherlands and isn’t profiting from the OSS schemes.

Still, the economic operator could acquire the professional to ease up and streamline compliance challenges for its operations in the country. 

VAT on Electronically Supplied Services in the Netherlands

Electronically Supplied Services 

The EU VAT Directive 2006/112/EC outlines Electronically Supplied Services as services provided via the Internet or other electronic channels. These services are characterized by automated delivery, involving limited to no manual human involvement. The presence of information technology is detrimental to defining the type of service as the digital one.

The Netherlands has incorporated the standardized definition of Electronically Supplied Services, established across the European Union, into its domestic legal framework.

In certain countries, we frequently encounter expressions like digital services, digital products, and electronic services during our interactions.

Taxability Rules for ESS

B2B supply of electronically supplied services – General rules for defining the place of supply of services are applicable

B2C supply of electronically supplied services – non-resident firms must implement VAT rules harmonized across the EU and tailored for this context. This entails applying the VAT rate applicable to the consumer’s place of residence.

Place of supply rules for distance sales of goods and B2C ESS supply of services – Should the supplier’s yearly revenue be below EUR 10,000, the trader has the option to adhere to VAT regulations in their country of domicile or opt for the One-Stop-Shop (OSS) rules.

Place of supply rules for distance sales of goods and B2C ESS supply of service – Should the supplier’s yearly revenue be below EUR 10,000, the trader has the option to adhere to VAT regulations in their country of domicile or opt for the One-Stop-Shop (OSS) rules.

How much is VAT in Netherlands for Electronically Supplied Services? 

The VAT Rate Netherlands: A standard VAT rate of 21% is applied in most cases on sales of Electronically Supplied Services in the Netherlands

E-Commerce VAT Rules in the Netherlands

The E-Commerce package, introduced on July 1, 2021, has been appropriately incorporated into the domestic VAT legislation.

The EU VAT legislation introduced important changes in the realm of electronic commerce within Member States and, to some extent, also in other non-EU countries. The lawmaker was motivated to streamline administrative complexities and standardize the rules and regulations governing e-commerce activities.

The evolution of EU-harmonized legislation on E-commerce can be vividly portrayed by examining the broadening scope of transactions within the regulatory framework.

The latest regulations encompass the subsequent transactions:

• Distance sales of low-value goods imported in consignments valued below EUR 150 from third countries or territories, subsequently sold by suppliers and deemed suppliers, excluding goods subject to excise duties.
• Intra-community remote sales of goods conducted by suppliers or deemed suppliers.
• Local sales of goods by deemed suppliers.
• Provision of Business-to-Consumer (B2C) services by foreign taxpayers not established in the EU  or by taxable individuals established within the EU but not in the customer’s Member State.

The E-Commerce legislative package brought expected improvements into the legacy reporting systems and outdated VAT registration processes.

The existing schemes have undergone revisions, and the introduction of the IOSS scheme is noteworthy.

The E-Commerce VAT package made the following special schemes available:

• Union One-Stop-Shop Scheme;

• Non-Union One-Stop-Scheme;

• Import One-Stop-Shop Scheme.

Overview of EU VAT Special Schemes 

The Non-Union Scheme applies to:

Businesses situated outside the EU and those lacking a permanent establishment within the EU.

The Non-Union Scheme encompasses Business-to-Consumer (B2C) provisions of all services where the taxable location is within any Member State. Should the merchant choose to employ this scheme, it must be utilized to assess taxes on all B2C transactions within the EU.

The Union Scheme applies to:

Taxable entities resident in the Member State that make B2C supply of services, where the taxable location differs from the supplier’s establishment, and for intra-community remote sales of goods.

Taxable businesses non-resident in the EU for intra-community remote sales of goods.

Electronic Interfaces, whether established or not within the EU, for intra-community remote sales of goods and specific domestic supplies of goods.

The Import Scheme applies to:

Any taxable entity engaging in remote sales of goods imported from third countries or territories in consignments, with values not surpassing the EUR 150 threshold, intended for customers within the EU.

EU and non-EU resident economic operators and electronic marketplaces are qualified to utilize this scheme.

OSS Return and Payment 

The VAT Netherlands rules don’t offer a simplified reporting system for foreign providers of digital services. 

The non-resident business can adhere to the OSS scheme if the stipulated conditions are met. 

Only if the business in question provides goods and/or services falling within the specifically designated list can use benefits offered by the OSS schemes, and only to that extent.

If types of supplies extend beyond this list or specific parameters exceed stipulated boundaries, the non-resident enterprise should adhere to the local registration process and follow the domestic rules.

Electronic Platform and Deemed Supplier Rules 

The Netherlands incorporated into its domestic laws the uniform VAT Directive concept of a deemed supplier, along with its scope and applicability.

When certain conditions are met, the platform operator facilitating the supply through a digital marketplace should be recognized as a deemed supplier.

The deemed supplier provision becomes applicable for the following scenarios involving the supply of goods:

• Instances where goods are imported in consignments from third countries or territories, valued at less than EUR 150, and are sold by the originating supplier to customers within the EU.
• Cases involving the supply of goods located in the EU, freely circulating within it and sold by a non-EU established originating supplier to customers residing in the EU without any restriction on the value of the goods.

The introduction of the deemed supplier VAT provision has imposed new obligations and shaped the procedures for processing sales from the originating supplier to the end customer when the supply is facilitated through digital platforms.

The sales transaction conducted via the electronic platform is separated into two interdependent transactions:

1. The supply from the underlying supplier to the electronic platform (considered a B2B supply);
2. The supply from the electronic platform to the end customer (considered a B2C supply).

When the digital platform is regarded as the deemed supplier of goods, it is obligatory to document and store essential VAT records, similar to any other taxable entity, to demonstrate compliance during audits.

The Digital Platform Operator should remember that the record-keeping requirements stipulated by the OSS or IOSS scheme, which apply to any taxable supplier utilizing those schemes, are equally applicable to them.

Invoice Requirements in the Netherlands

General invoice information:

• Date of Invoice issuance;
• Invoice number;
• Date on which the goods are delivered or services are performed if different from the invoice issuance date.

Seller information:

• Business name;
• Full address;
• VAT number.

Buyer information:

• Business name;
• Full address;
• VAT number if the buyer is a legal person.

Fiscal Information:

• Description and breakdown of the goods or services – quantity, discounts, unit price excl. VAT;
• For advance payment: the date of payment if differs from the invoice date;
• Taxable amount;
• The VAT rate(s) applied, and the breakdown of VAT per rate;
• Invoice Total.

Additional information required in particular cases:

• Exemption reference – guaranteed by precise norm;
• Reverse charge – description;
• Intra-community supply of goods;
• Tax Representative information.

Foreign Currency Invoice in the Netherlands

In the Netherlands it’s permissible to issue tax invoices in foreign currencies, but the requirements dictate that total VAT amount should be indicated in EUR, as well as exchange rate and conversion details in both cases. The exchange rate published by the ECB, valid when the tax becomes chargeable, should be used for the conversion rate. 

VAT Returns in the Netherlands 

Domestic VAT returns 

Taxpayers registered for VAT in the Netherlands should submit VAT returns even if they haven’t had any turnover in the reporting period. The law stipulates that the reporting period could be monthly, quarterly, or yearly, and it mainly depends on the turnover of the economic operator. 

In general, the fillings are done every quarter.

There are differences in relation to deadlines for submission of VAT returns for domestic and foreign businesses registered for VAT Netherlands. 

Domestic businesses should file the monthly or quarterly return until the last day of the following month.

Non-resident businesses should file monthly or quarterly returns until the last day of the month following the month after the reporting period. 

Annual VAT return is also required for specific VAT taxpayers. 

Penalties for late reporting and omitted declarations

Taxpayers are obliged to charge Netherlands VAT on their transactions unequivocally and submit the VAT return. If they do the return fillings after the deadline, they can expect to allocate more funds than they would if they had filled the return within the permitted timeframe.  

When taxpayers don’t comply with the VAT  Netherlands rules, the responsible tax authority can impose a fine for non-compliance. 

The type of additional expense, amount, and way it is processed depends mainly on the following parameters regarding the return submission.

The taxpayer pays late: 

• Payment of the return within the first seven days of the leniency period – the possibility of no fine;
• Payment of the return after the leniency period – Payment default penalty of 3% of the late payment amount, with a minimum penalty of EUR 50 and a maximum of EUR 5,514;
• Part of the payment after the leniency period and part during that period – Default penalty of 3% for the total late payment, with minimum penalty of EUR 50 and a maximum of EUR 5,514.

Taxpayer don’t pay or pay partially: 

• Penalty of 3% of the total amount not paid, with minimum penalty of EUR 50 and a maximum of EUR 5,514  

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