Companies that purchased goods as per their business purposes or that incurred other business-specific costs can claim a VAT refund. This process differs based on whether or not the business is based in an EU or a non-EU country (as seen above, non-resident companies can apply for these refunds).
When the business is incorporated in a non-EU country, the business owns needs to fill in a special form for the registration of foreign business aid. This step also includes a questionnaire that determines if the application may be filed immediately or if the business also needs to apply for a VAT number in the Netherlands or a registration number. When filing a VAT refund request, the business must also include the following documents: an entrepreneurship statement from the tax administration in the country of origin, the original invoices as well as relevant import documents. Companies in a non-EU country, for example, the United States, can submit a VAT refund request for up to five years after e year in which the business was charged for VAT purposes. However, entrepreneurs should be aware that when they claim the return for the years 2013-2016 they do not have the right to appeal to the courts against the decision issued by the Dutch tax authorities. One of our lawyers can provide more details.
Entrepreneurs who are interested in finding out more information about VAT returns and how they can make the refund calculation, as well as other calculations, can reach out to our tax lawyers in the Netherlands. We can also provide more details about the VAT number in the Netherlands, in addition to the details already mentioned in this article.
- 21%: this is the general tariff applicable to most of the services provided by Dutch companies.
- 9%: this low tariff applies to food and drinks, agricultural products and services, medicines, daily newspapers, magazines and other common products and services,
- 0%: this mainly to the supply of goods from the Netherlands to another country in the EU; it also applies to the international transport of passengers.
In some industries and for certain activities, you are exempt from VAT and you will not charge this tax, for example, collective interests, composers, writers, cartoonists and journalists, financial and insurance services, fund-raising activities, healthcare, gambling, childcare, education, radio and television, sports organizations and sports clubs. An agricultural scheme applies to market gardeners, livestock farmers as well as foresters in the Netherlands. The goods and services supplied by business owners in these fields is also subject to the VAT exemption. One of our Dutch lawyers can provide more details about this regime and, in general, about the goods, services, and professions that are subject to the VAT exemption.
Digital services are subject to different VAT rules, meaning that they are taxed in the country of the client (where he lives or where he is established). These types of services refer to telecommunication, broadcasting and electronic services. One of our lawyers in the Netherlands can provide more details on the types of services covered by these taxation rules.
VAT is also applicable to immovable property in the Netherlands. There are three cases when this tax applies, namely when an owner sells property, when he lets property or when he lets a holiday home. In the case of a sale, this applies when the purchaser is a private individual or a foreign entrepreneur or when the purchaser is an entrepreneur who is established in the Netherlands. VAT is payable upon the same of a building or a part of a building with land within two years of its first occupation. For letting immovable property, VAT applies for letting hotels, guesthouses, campsites, parking lots, mooring and storage places for vessels and in other situations. Homeowners who are frequently letting their holiday homes may be treated as an entrepreneur for VAT purposes, in case this happens frequently. When the holiday home is only purchased for private use, the tax is not applicable, however, whenever the home is let to guests directly or through intermediaries, the activity will be charged.
One of our attorneys in the Netherlands can provide more details about the situations in which VAT is applicable for selling or letting immovable property as well as for the use of a holiday home. In most cases, however, these activities related to the property are exempted from VAT.
If you want to open a company in the Netherlands and need assistance with the incorporation procedure, we can assist with it. We can also help with the VAT registration in Netherlands.
Calculating the VAT in the Netherlands
Once the VAT registration is completed, the computation of the tax must be made in accordance with the requirements imposed by the Tax and Customs Administration in the Netherlands. The VAT is calculated based on the total amount of money charged on the customer which must include the value of the products, the delivery, the packaging and other costs. It is important to note that the depositing of goods is exempt from the VAT in the Netherlands.
Special attention must be paid upon the charge of the VAT for imports from EU and non-EU countries. Given the fact that the Netherlands is an EU member state, the EU intra-Community acquisition regulations apply, case in which the VAT will be charged in accordance with the VAT imposed by the supplier. When the amount of money is not in euros, it must be exchanged.
When importing goods from a non-EU country, the VAT will be calculated by the Dutch Customs Administration. If the amount of money on the invoice is not in euros, the amount will be converted into euros on the import declaration.
What are the VAT reporting requirements?
VAT registration in Netherlands is mandatory, however, the obligations of the entrepreneur do not stop with this step. They are also required to file VAT returns and pay the applicable VAT rates according to the law in force and by observing the terms. VAT returns are filed on a monthly, quarterly or annual basis, depending on the amount of VAT that is to be paid. When the VAT return is filed for the first time, the applicant is required to enclose all of the original invoices. The Dutch authorities have the right to inspect the tax return and may ask for additional documents, such as copies of the issued invoices or the import documents, in addition to the original invoices for purchases that are usually required.
Foreign investors in the Netherlands may appoint a tax representative who will handle the requirements set forth by the Tax and Customs Administration. Working with a tax representative is mandatory when the entrepreneur wishes to use the reverse charge mechanism on import. Having a representative does not mean that the business owner is not liable for tax purposes. The main requirements for a tax representative are that he must be based in the country and he must offer financial security for the VAT. His main duties are filling in the VAT return, filling in the intra-community transactions statement and applying the reverse-charge mechanism on imports.
Additional information for the use of the VAT number in the Netherlands
VAT deregistration in the Netherlands is closely linked to the company’s registration status with the Chamber of Commerce (KVK). When the company is deregistered from the Chamber, it will also be deregistered from the Tax and Customs Administration. This is an automatic process that will lead to the termination of the VAT number. The process is to be notified to the entrepreneur via a written confirmation.
Investors should know that all companies in the Netherlands are required to use the new VAT identification number starting with January 2020. The new number was introduced in order to offer a greater level of protection for entrepreneurs who are doing business in the country. The usage of the new number is important for the VAT returns issued starting with this date. Moreover, any requests for cross-border VAT refunds are to be issued by using the new VAT number in the Netherlands in 2020. New VAT identification numbers can be verified online, using the VIES platform. One of our lawyers can provide more details.
Company formation in the Netherlands is attractive for many entrepreneurs because of not only the favorable business regime and incentives for companies but also because of the country’s favorable location within the EU. According to Statistics Netherlands, the following numbers were recorded in regards to the investment climate in the country:
- 5.65% growth: the volume of investments in tangible fixed assets grew in October 2019 compared to the same month in 2018.
- 2.9: the indicator of the manufacturer’s confidence in December was up from 2.8 in November 2019.
- 119 bn EUR: the value of the domestic goods exports and 99 bn EUR service exports from the Netherlands 2017.