The NetherlandsManual

The Netherlands has a simple VAT rate structure with only a standard VAT rate and one reduced VAT rate

VAT groups in The Netherlands

VAT grouping is possible in the Netherlands. Normally, creating a VAT group is a voluntary choice made by the taxpayer (no mandatory VAT grouping). Only where the tax authorities have carried an audit and after reviewing the links between different members of the same group, they may determine that a VAT group is required.

Regarding the eligibility criteria, the following conditions and information should be taken into account:

  • Two or more taxable persons established in The Netherlands and having financial, economic and organizational links can create a VAT group.
  • Financial links exist when more than 50% of the shares are owned directly or indirectly by another member. Organizational links require common management for all entities. Regarding the economic link test, it requires all group members to carry a similar activity or within the same industry.
  • Holding companies are excluded unless they are involved in the management of the group.
  • Non-established companies are also excluded. Branches and permanent establishments are accepted.

The application for a VAT group is submitted to the Dutch tax authorities, who will assess the request and make a decision. However, recent Court decisions have allowed for the VAT group simplifications to apply as soon as all conditions are met (no application would be required). Upon registration, the VAT group will receive a VAT identification number which is separate from the VAT numbers of each member.

All supplies within the VAT group are disregarded for VAT purposes. Normally, one single VAT return will be filed for the entire group, although exceptions can be requested. Finally, members of the VAT group are jointly and severally liable for VAT debts of the group.

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