VAT Rates in the Netherlands
Dutch VAT Rates
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
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.
Use and enjoyment rules in The Netherlands
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.
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 as soon as it is certain that the amount is irrecoverable, or 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 VAT return of the period where the conditions have been met.
Find here more information about the Dutch bad debt relief.
