Reverse charge in The Netherlands
Reverse charge for non-established suppliers – The Netherlands
According to art 194 of the VAT Directive, Member States may implement an optional reverse charge on supplies made by non-established businesses. The Netherlands has introduced this reverse charge on supplies of goods and services located in The Netherlands. Where a non-established supplier supplies goods or provides services located in the Netherlands to a VAT registered and established customer, domestic reverse charge applies. It is not relevant if the supplier is registered or not.
Supplier requirementsNot established in The Netherlands (irrelevant if the supplier is registered or not for VAT)
Customer requirementsEstablished in The Netherlands
ScopeSupplies of goods and supplies of services located in The Netherlands
The domestic reverse charge on services is rather exceptional as it would only apply where the B2B rule on services does not apply. This is, for example, the case for supplies of services connected to immoveable property. The following wording should be stated on the invoice when domestic reverse charge by non-established suppliers applies: "btw verlegd / Reverse charge applies according to article 12, para 3 of Dutch VAT law".
Additionally, there is a specific reverse charge on supplies of goods made through distribution systems (gas, heat, electricity, etc.) by non-established suppliers to customers with a Dutch VAT number. This reverse charge is established in the article 12, para 2 of the Dutch VAT law.
Supplier requirementsNot established in The Netherlands
(Irrelevant if the supplier is registered or not for VAT)
Customer requirementsTaxable person VAT registered in The Netherlands.
ScopeSupplies of goods through distribution systems located in The Netherlands.
Reverse charge in B2B services in The Netherlands
Article 196 of the VAT Directive requires the reverse charge mechanism on all services subject to the B2B rule introduced in art. 44 of the same Directive. The B2B rule locates the transaction where the business customer is located. In case the customer is a private individual, B2C rules locate the transaction where the supplier is located. According to the general B2B rule, any business resident outside the Netherlands supplying services to a Dutch based customer will not charge any VAT and the transaction will be reverse charged by the customer. There are however a number of exceptions to this rule. Where these exceptions apply, reverse charge is still applicable in the Netherlands provided domestic reverse charge conditions are met:
- Services connected to immoveable property are located where the property is located.
- Passenger transport services will be located where the transport takes places (apportioned if necessary).
- Catering services are located where the catering takes place.
- Short term leasing of means of transport are located where the vehicle put at the disposal of the customer.
- Access to conferences, fairs and exhibitions is located where the event takes place.
The general rule may also be deviated where the supplier has a permanent establishment in the country of the customer and the PE has intervened in the supply.
Dutch Reverse Charge on specific goods
Domestic reverse charge may also apply on certain goods and services in The Netherlands. The conditions and scope are different in each case. In some instances, this kind of reverse charge also applies when the supplier is established.
- Mobile phones, computer chips, IT equipment including laptops, tables and game consoles where the sale value exceeds EUR 10,000
- Construction work and ancillary services from a subcontractor to a contractor and from a contractor to a self-builder
- Supplies of goods released from a VAT warehouse
- Immoveable property (where opted to tax) irrespective of supplier and customer status
- CO2 Emissions
- Old used materials, scrap and waste irrespective of supplier and customer status
- Goods provided as security by one taxable person to another as part of a security
- Investment gold
- Telecommunication services (since June 2017).
Find here more information about reverse charge mechanism.
Dutch use and enjoyment rules
When it comes to establishing the place of supply of a transaction, Member states may introduce another exception to the B2B rule according to the place where the services have been used and enjoyed. This exception may be introduced to avoid double taxation (positive use and enjoyment rules), to avoid non-taxation (negative use and enjoyment rules), or both.
The Netherlands introduced the positive use and enjoyment for certain B2C supplies of services, hence establishing the place of supply in the non-EU country where the customer is established. Some of the services included are supplies of staff and lawyer’s services.
The Netherlands also introduced the negative use and enjoyment rule, hence attracting the place of supply to The Netherlands. This concerns the previous services when provided by a Supplier established in a country outside the EU to bodies established in The Netherlands, provided that the services are used and enjoyed in this country.
Finally, the renting of means of transport B2C by a Supplier established outside the EU, when the customer is resident or established in The Netherlands the place of supply is attracted to The Netherlands when the services are effectively used and enjoyed in The Netherlands.