VAT in Netherlands
Dutch VAT rates
The Netherlands has a simple VAT rate structure with only a standard VAT rate and one reduced VAT rate:
- Standard rate: 21%
- Reduced rates: 9%
The Netherlands has opted for the reduced on a number of items allowed by the VAT Directive. Super-reduced rates do not apply in The Netherlands (source: European Commission)
Netherlands Vat Tax
Pharmaceutical products9% and 21%
Medical equipment for disabled persons9% and 21%
Passenger transport9% and 21% (also exempt)
Books, E-books, physical and digital newspapers9%
Admission to cultural services (theatre, etc)9%
Admission to amusement parks9%
Writers / composers9% or Exempt
Restaurant and catering services9%
Admission to sporting events9%
Repairing shoes and leather goods9%
Repairing clothing and household linen9%
Deduction limits in The Netherlands
Input VAT is generally deductible as long as the goods or services are used for business purposes. Where business expenses are used for both, business and private use, VAT is not deductible when the value of the private use exceeds €227 per year. This limit applies to the net value of the total expenses per employee per year.
In addition, the below list provides detail on deduction rules for each type of expense:
- Input VAT on hotel accommodation is deductible when it is used for business purposes.
- Input VAT on conferences, fairs and exhibitions is 100% deductible provided the expense is incurred for business purposes by employees of the company (restaurant meals are excluded)
- Business gifts are 100% deductible provided the €227 limit is not exceeded.
- Car rental, car repair and fuel expenses are 100% deductible. On car rental, the authorities often allow only an 84% deduction. The taxpayer must prove that the expense is wholly and entirely used for business purposes in order to deduct 100% of VAT.
- Taxi, train and other transport expenses is 100% deductible provided the expense is incurred for business purposes.
- Entertainment client expenses are 100% deductible provided the €227 limit is not exceeded.
- VAT charged over food and drink in catering establishments can never be deducted.
A valid and fully compliant VAT invoice must be issued for each expense on which VAT is deducted.
Deducting VAT prior to the beginning of the economic activity is generally allowed provided the taxpayer can prove that the costs incurred where fully used for business purposes. These costs would be deducted in the first VAT return following the VAT registration.
Dutch statute of limitations
Input VAT should be claimed in a VAT return filed no later than the end of the fifth year after VAT became due.
The time limit on the obligation to pay VAT is also five years.
Tax point rules in The Netherlands
The tax point is the time when VAT becomes due. VAT due should be distinguished from VAT payable. VAT is due when the tax point occurs. VAT is payable between the day after the end of the reporting period and the due date to submit and pay the VAT return.
- General rule: Tax point arises when the invoice is issued. Invoices must be issued at the latest by 15th day of the month following the month in which the supply was made. In case the supply is made and the invoice is not issued, or issued late, then the tax point occurs at the latest on the date on which the invoice should have been issued, and in case of a B2C transaction, in the date of the supply.
- Prepayments or advanced payments create a tax point because an invoice must be issued for each instalment or prepayment.
- Intra-Community acquisitions: Tax point occurs on the invoice date or the 15th day of the month following the month in which the invoice was issued, whichever occurs earlier.
- Import: Tax point occurs when the goods are imported according to the relevant import documents. This date may be postponed if the postponed import VAT accounting applies.