Value added tax (“VAT“) is charged for the consumption of goods and services in the Netherlands and is levied based on the Dutch VAT Act 1968 and the underlying VAT Directive 2006/112/EG.
A resident company is considered to be a “taxable person” if it is an “entrepreneur” for VAT purposes under the Dutch VAT Act. In order to qualify as such, it is required that the company independently carries out economic activities on a continuous basis. The Dutch VAT Act further provides for the possibility to establish a VAT fiscal unity between Dutch resident taxable persons. Non-residents can be taxed as resident taxpayers if they carry out any taxable transactions in the Netherlands.
The supply of goods and services against remuneration within the Netherlands shall be subject to VAT. The same applies to the intra-EU acquisition and importation of goods in the Netherlands.
Services carried out for the benefit of taxable persons by another taxable person (business-to-business or B2B) are generally deemed to be supplied at the place where the recipient of the services is established. In the case of cross-border services within the EU, a Dutch entrepreneur does not have to charge Dutch VAT, but the recipient of these services must account for the VAT payable on these services in its local VAT return under the reverse charge mechanism (and vice versa). Business-to-consumer services (B2C) are generally deemed to be supplied in the country where the supplier is established.
The Dutch VAT Act provides for several exemptions. The supply of an immovable property that takes place at least two years after first use should be exempt for VAT purposes (but generally is subject to real estate transfer tax). Furthermore, the supply of various social and cultural services, insurance services, financial services and health services are exempt from VAT. The transfer of (part of) a totality of assets that qualifies as a business is outside the scope of VAT if certain requirements are met; namely that the recipient of the assets must continue the business.
The general rate is 21%. A lower rate of 9% applies to basic goods and services. A rate of 0% applies to intra-EU supplies, exports and certain services rendered in connection with exports. In addition, a rate of 0% applies to the export of certain services to customers outside the EU.
Whether an entrepreneur is allowed to deduct the Dutch VAT incurred depends on the nature of its outgoing transactions. Entrepreneurs who solely provide VAT taxable transactions (i.e. not being subject to an exemption) are generally allowed to apply a full VAT recovery right. VAT can be deducted in the periodical VAT return.
Entrepreneurs must register with the competent Dutch tax authorities in order to receive a VAT identification number. VAT entrepreneurs must generally file a quarterly or monthly VAT return. This frequency depends mainly on the amount of VAT payable/deductible. Non-residents that carry out taxable transactions in the Netherlands must under circumstances also register with the Dutch tax authorities.
Last updated September 2021