VAT registrations and simplications in the Netherlands
When do I need a Dutch VAT number?
As a general rule, a foreign business must register for VAT in The Netherlands as soon as a taxable supply is made. Registrations thresholds do not apply to non-established companies. The following are some usual examples of taxable transactions:
- Domestic supply of goods not reverse charged: A supply of goods located in the Netherlands where reverse charge does not apply requires a VAT registration of the supplier.
- Supply of services not reverse charged: Foreign non-established businesses supplying services on which Dutch VAT is due by the supplier must register for VAT. These services are rather exceptional, as the general B2B rule would apply.
- Export: Exporting goods to a non-EU country requires a VAT number before the export is made.
- Intra-Community acquisition: Acquiring goods from another Member State where all conditions for intra-Community movements are met requires the customer to register for VAT.
- Intra-Community supply: Supplying goods another Member State is also a taxable transaction that obliges the supplier to register for VAT.
- Distance sales above the threshold also require a VAT number. See Dutch distance sales rules for more information.
Companies can also register voluntarily in The Netherlands. For example, if they are incurring Dutch VAT but not making any taxable transaction, it is possible to register for VAT and claim the VAT incurred via the VAT return instead of the 8th or 13th Directive.
The VAT registration threshold for established Dutch businesses is €1,350 of VAT due in a complete year. From €1,350 to €1,883 there is a simplification gradually increasing VAT obligations, but where the VAT due exceeds €1,883 in a given year, a VAT registration is mandatory for all Dutch businesses. As mentioned above, this limit does not apply to non-established companies."
Fiscal representative in The Netherlands
In general, EU and non-EU businesses do not need a fiscal representative when registering for VAT purposes in the Netherlands. Unlike other EU countries, EU and non-EU companies can register directly for VAT in the Netherlands.
Registering directly means that the legal representative of the company can sign the registration form without any local Dutch involvement.
Appointing a fiscal representative is however mandatory when applying for import simplifications such as Import VAT deferral, using VAT or customs warehouses or making certain zero-rated supplies.
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."
Dutch consignment and call-off stock
The Netherlands has introduced a consignment stock simplification. Where a company moves goods into The Netherlands from another EU country and these goods are left in stock in the country, there is no need for a VAT registration of the supplier provided the customer is registered for VAT in the Netherlands.
Dutch consignment stock is not differentiated from call-off stock. The simplification applies irrespective of the client having full control or not of the goods. This scheme also applies to imports, in which case a written agreement between the consignor and consignee is mandatory.
There is no time limit in the Dutch consignment stock, this means the goods can remain in stock in the Netherlands for as long as it is required.
When the ownership of the goods passes from the supplier to the customer, the customer must report an intra-Community acquisition of goods in The Netherlands. In cases of import, the consignor is still required to pay VAT.
Bad debt relief in The Netherlands
Bad debt regime applies on sales where an invoice has been issued with VAT, reported in the VAT return and the VAT amount has been paid to the tax authorities but the whole price has not been collected from the customer. This is often due to the client´s bankruptcy, insolvency or simple missed payments to suppliers. In these cases, most countries allow to recover the VAT initially paid to the authorities, however, the conditions change from one country to another.
The Netherlands has a flexible bad debt relief in comparison with other EU countries.
Input VAT on bad debt can be recovered when one year has been passed since the invoice was claimable. There are no additional formalities (eg no credit notes, corrective returns or letters to the authorities are not required). VAT on bad debt can be claimed directly in the next VAT return once the conditions have been met.
Regarding the deduction of invoices that have not been paid to the supplier, if the VAT amount is deducted on a debt that is not paid within the one-year period, the debtor will have to repay the VAT that the debtor has deducted. If the debtor pays at a later stage the VAT can then be deducted.
Import VAT deferral and postponed import VAT in The Netherlands
The Netherlands has introduced a postponed import VAT accounting mechanism where import VAT can be reported as input and output VAT (reverse charged) in the VAT return instead of being paid to the authorities upon importation.
Import VAT deferral, meaning delaying the payment of VAT for a given period, is not applicable in the Netherlands. You should however be aware of the difference as postponed import VAT accounting is sometimes referred as deferral import VAT.
For postponed import VAT accounting to apply, a business must be established in the Netherlands or registered through a limited or general fiscal representative. Imports must be done on a regular basis and the applicant must keep records of all imported goods.
For more information on limited fiscal representation see section Global VAT numbers and limited fiscal representative.
Customs warehouse and VAT warehouse in The Netherlands
The Netherlands has introduced both VAT regimes, VAT warehouses and Customs warehouses.
VAT warehouses apply specifically for goods that have cleared customs (T2 products). VAT is not due when these goods are traded under the VAT warehouse simplification. Only certain goods can benefit from the VAT warehouse regime, the tax authorities published a list every year with these goods, which normally include unfinished goods. These are products that need to be processed before being sold to the end consumer such as mineral products, agricultural commodities and certain chemical products.
There are two kinds of VAT warehouses:
- Non-physical VAT warehouse (administrative VAT warehouse): This regime allows goods to be traded under the same conditions as within a VAT warehouse in any place within the Netherlands. Goods do not need to be located within the physical boundaries of a VAT warehouse, however, both supplier and client need to hold a VAT warehouse license.
- Physical VAT warehouse: As in other countries, VAT is not charged on goods bought and sold within a VAT warehouse. In this case, the supplier and the customer do not need to hold a VAT warehouse license, however, the goods must physically stay within the space limits of the VAT warehouse, which will be managed by a license owner. When the goods leave the VAT warehouse, the customer outside the warehouse accounts for VAT under the reverse charge mechanism.
Customs warehouses apply specifically for goods that have not cleared customs (T1 products). When goods from a third (non-EU) country are placed in a customs warehouse, no customs duties, tariffs or VAT is due. These taxes become due when the goods leave the Customs warehouse regime and the taxable person releasing the goods is the importer who is liable for VAT. In case the goods leave a customs warehouse but are immediately placed in another Customs warehouse, no import is made."
Global VAT numbers – Dutch limited fiscal representation
Global VAT numbers are known as Limited Fiscal Representation in the Netherlands. A limited fiscal representative can be used for imports followed by domestic supplies. In these cases, a VAT registration is not required, all transactions are accounted and reported by the limited fiscal representative under his own VAT number.