The Netherlands uses a value-added tax system (VAT), which is named Belasting toegevoegde waarde (BTW) in Dutch. This system is very similar to the system that is used in other countries of the European Union. Not all transactions are subject to VAT, but in Holland, it is very common to charge this value-added tax. The regular tax rate is 21%, and this rate is charged on (almost) all goods and services by businesses within Holland.

What is the Dutch VAT rate?
The Dutch VAT (Value Added Tax) system applies three rates: 21% as the standard rate, 9% for essentials such as food, medicine, books, and hairdressing, and 0% for certain international transactions like exports and intra-EU supplies. Businesses in the Netherlands must register for VAT if required and apply the correct rate based on their goods or services.

If products are imported from outside the EU, this VAT rate may also apply. The Netherlands  also uses a special lower tax rate. This rate was 6% for many years, and it applies to specific goods and services, for instance, food products, medicine, art, antiques, books, entry to museums, zoos, theaters, and sports. This rate has been increased to 9% as of 2019.

The value-added tax (VAT) is a broadly based consumption tax that all EU countries use, including the Netherlands. As a consumption tax, the burden of paying it is placed on the final consumer of the goods or services. While all EU countries apply a VAT tax, each member country can make decisions about what to tax and on what rate levels. VAT in the Netherlands is considered an indirect tax because it is first paid to the seller of the goods or services. The seller then pays the tax to the revenue authorities.

More information about the Dutch VAT rate

The value-added tax rate in the Netherlands is rather straightforward. However, there are some exceptions that can make it harder to understand every little detail. If you want to be sure you are doing everything right, it would be best to hire a consultant who can guide you through the process. Intercompany Solutions for example. We can help to set up your business in the Netherlands. We provide corporate solutions for investors and companies worldwide, and serve international clients who are interested in company formations and corporate services. We help entrepreneurs with all aspects of their company setup. Read more on setting up a business in the Netherlands.

The different VAT rates in the Netherlands

The Netherlands has several VAT rates and a list of goods and services that are VAT-exempt. The main, general Dutch VAT rate is 21% and this has been so since 2012. This rate applies to most goods and services.

There is a special VAT rate of 9% that applies to a subsection of goods that are considered necessities. The goods include foods and drinks (but not alcohol), livestock meant for agricultural purposes, medical necessities (such as prescription medications), most reading materials, and seeds for use in agriculture and horticulture. Materials purchased for home renovations are also sometimes taxed at this rate, depending on the age of the home. There are a few services that are taxed at this lower 6% rate, as well. Among these are hairdressing services, vacation rental homes, public performances that are considered artistic (plays and musical performances), and most transportation services.

A zero VAT rate is applied to items that are not consumed in the Netherlands. If they are shipped to and consumed outside the EU, then no VAT will be applied. Likewise, if the goods are purchased by a legal business entity within another EU country, then that entity is responsible for charging VAT to the final consumer in the country in which it exists. However, if the goods are sent to a final consumer in another EU country, then you must charge VAT in the Netherlands.

VAT exemptions in the Netherlands

The Netherlands also has a number of exemptions; visible exports are amongst these. These are zero-rated. If VAT exemptions apply, you don’t have to pay the tax, and you also cannot deduct it. There is a list of services that are completely exempt from VAT in the Netherlands. By being exempt, the state does not charge any tax on them whatsoever. These exemptions include medical services provided by a doctor or nurse, banking services, insurance advice and services, childcare services, and educational services.

Journalistic services are also VAT exempt, but only if the service provided by the journalist is deemed to be intellectual property and is only that journalist’s original ideas. Determining what is and what is not VAT exempt can be tricky, and it is suggested that you always speak with a local advisor to ascertain your particular VAT status. It is not possible to claim a refund of the VAT that is charged over the costs and investments that are related to the goods and services that fall under the VAT exemptions. Goods and services that are exempted from VAT are: letting or selling immovable property (provided that the building is more than 2 years old), healthcare services, childcare, care services and home care and other similar topics.

Are there any other tax exemptions in the Netherlands?

These aren’t the only tax exemptions in the Netherlands. Other tax exemptions are sports organizations and sports clubs, services supplied by socio-cultural institutions, financial services and insurances, services supplied by composers, writers, and journalists, education, and fundraising activities. There is also an agricultural scheme in place, which applies to agricultural and livestock farmers, foresters, and market gardeners. All the goods and services that are provided by these entrepreneurs are also exempted from VAT. This scheme is called ‘Landbouwregeling’. All other tax exemptions in Holland can be requested from the Dutch tax office.

Tax-free shopping

A topic that needs some special attention is tax-free shopping. If you want to offer goods to customers who desire to shop tax-free, then you will need to take some extra measures and precautions. For example, you will need to check their ID or passport to make sure that these customers live outside the EU. Another requirement is that the goods you sell will leave the EU with the customer. In cases that you do charge VAT, you can return in to the customer at a later stage. You can achieve this by supplying your customer with an invoice, that also mentions the customer’s ID number. They will need to have this document signed by customs for export. Once the invoice is signed, they can send it back to you and you can refund the VAT they paid.

VAT rate for foreign entrepreneurs

If you are doing business in the Netherlands, but your business is established outside the Netherlands, then you will have to deal with the Dutch regulations. If the service or product you provide is supplied in the Netherlands, you usually have to pay value added tax here. However, in reality, the tax is often reverse-charged to the person who receives the service or product. If this is not a possibility, you have to pay the value added tax in the Netherlands. Reverse-charging VAT is possible if your client is an entrepreneur or a legal entity, established in the Netherlands. In that case, you can exclude the tax from your invoice and state ‘VAT reverse-charged’. You are allowed to deduct the tax charged over any costs related to this transaction.

VAT registration in the Netherlands

If your company provides any goods and services for consumption in the Netherlands or the EU, then it must register for VAT. Once you are registered, you are required to submit annual VAT returns and make regular payments to the revenue service of VAT you have received. These VAT submissions can now be made electronically. Payments can be made either monthly or quarterly. Some smaller companies that collect very little VAT may be able to make one annual VAT return and payment, instead of paying regularly throughout the year. You should consult with an advisor to determine if your VAT payments are low enough to qualify for a single, yearly payment.

In the Netherlands, businesses must register for VAT if their annual turnover exceeds the €20,000 threshold. This applies to both domestic and foreign companies supplying goods or services within the Netherlands. Companies below this threshold are generally not required to register for VAT but may opt for voluntary registration if desired.

Depending on the size of the VAT liability, businesses must submit their VAT returns monthly or quarterly to the Dutch tax authorities. Smaller businesses with lower VAT obligations may qualify to file an annual VAT return instead. The Dutch tax office determines the filing frequency based on the VAT amount due.

Intra-Community Supplies and the Reverse Charge Mechanism

If a business supplies goods to another EU country, the transaction is considered an intra-community supply. In this case, Dutch VAT is not charged, and the buyer is responsible for paying VAT in their home country. This is managed through the reverse charge mechanism, where the recipient of the goods accounts for the VAT in their own country.

For example, if you sell a product for €100 excluding VAT, and the standard 21% VAT is applied, the VAT amount would be €21. The total price including VAT would then be €121, which is the amount the customer ultimately pays.

Please contact our Dutch advisor for further details about VAT issues in the Netherlands. We can advise you on tax exemptions, and what you must do to qualify for them. We can also assist you with the submission of annual tax returns and help you register your company for VAT in the Netherlands.

FAQ's

What are the current Dutch VAT rates?

The current Dutch VAT rates are 21% for standard goods and services, 9% for certain goods and services, and 0% for exports and intra-community transactions within the EU. The rates are in line with EU VAT rules and can be subject to change.

Which goods and services are taxed at 9% in the Netherlands?

In the Netherlands, certain goods and services are taxed at a reduced rate of 9%. This includes food products, medicine, books, public transport, and certain services related to tourism and recreation. Specific conditions apply, so it’s essential to check for eligibility.

What qualifies for 0% VAT in the Netherlands?

0% VAT is applied to goods and services that are exported outside the European Union or sold to EU countries under certain conditions. Additionally, certain international services, such as transportation of goods and passengers, are also subject to 0% VAT.

How do foreign companies handle Dutch VAT?

Foreign companies that sell goods or services in the Netherlands may be required to register for VAT in the Netherlands. If their turnover exceeds certain thresholds, they must charge Dutch VAT on sales made within the country. VAT on imports is also applicable. Foreign businesses can reclaim VAT paid on expenses related to their operations in the Netherlands.

Are you considering establishing a company in the Netherlands? One of your first and most crucial decisions will be choosing between a private limited liability company (BV) or a public limited liability company (NV). While both structures offer liability protection and international credibility, they serve distinctly different business purposes.

The most popular corporate entity in the Netherlands is by far the private limited liability company. Almost all of our clients choose this company type, as it matches well with most business ideas and professional goals.

What is the meaning of BV in the Netherlands?
BV stands for Besloten Vennootschap, which is the Dutch term for a private limited company. A BV has legal personality, meaning the company itself—not the individual shareholders—is typically liable for business debts and obligations.

In addition to the private limited liability company (bv), you can also choose to incorporate a public limited liability company (nv). Although these two legal entities overlap somewhat and have some similarities, there are many noteworthy differences that you should take into account should you wish to establish one of these two types of companies.

We will list all similarities and differences on this page to make it easier for you to make an informed decision about this matter. We will also inform you on how to make the best choice in your particular situation.

The private limited liability company (Dutch BV)

You can register a private limited liability company in the Dutch corporate tax register, providing you with the option to do business overseas.

A private liability company differs from a public liability company in the way that a private company does not have its stock available for public purchase on the stock exchange.

However, a private Dutch company is still considered a legal entity separate from its shareholders and has its own identity in the eyes of the law for litigation or taxation purposes.

Additionally, private liability companies must also register in the Dutch Trade Register in order to engage in commercial activity.

One of the main benefits of a private limited liability company is its limited liability for directors and shareholders. Only when you can be seen as accountable for certain debts is there a chance that you can be held personally accountable financially. This is also the main reason most entrepreneurs choose the Dutch BV as their company type.

Characteristics of the Dutch BV

The BV is a privately held Dutch legal entity comparable to a ‘private limited liability company’. There are some main characteristics that explain how a BV works and how it differs from other legal entities, which we will list below.

Minimal Capital Requirement

• Only €1 minimum share capital needed for BV formation
• Compared to €45,000 for NV

Share Structure

• Shares require shareholder permission for transfer
• Multiple share types available (voting/non-voting)
• Profit sharing can be limited but voting rights required
• No public stock exchange listing

Ownership & Registration

• Shareholders listed in company register
• Foreign or local entities/individuals can be shareholders
• Transfer restrictions possible
• Privately held by directors/shareholders only

Financial Protection

• Limited liability for shareholders
• Only liable for share capital amount
• Exception: proven improper management

Governance Flexibility

• Founders determine paid-up capital
• Registered in articles of association
• Different voting and dividend rights possible
• Simple incorporation process under Dutch law

Tax Benefits

• Low corporate income tax rates
• Competitive within EU framework
• Reduced formation costs
• Simplified business law requirements

International Accessibility

• Open to foreign companies
• Subsidiary structure possible
• Foreign directors allowed
• Flexible international structure

Benefits of the Dutch BV

The Dutch BV offers several interesting benefits for entrepreneurs, which is exactly why this legal entity is chosen so often when establishing a corporate entity.

Limited Liability Protection

A Dutch BV provides strong protection for your personal assets. As a shareholder or director, you're only liable for your invested capital - not for company debts. This protection remains valid unless there's proven fraud or improper management.

Holding Structure Benefits

Create a sophisticated business structure by dividing assets and risks among multiple BVs under one holding company. This structure safeguards your assets even if a subsidiary faces financial difficulties. The holding company itself stays protected, allowing you to manage multiple businesses efficiently.

Attractive Tax Framework

Benefit from competitive corporate tax rates: just 19% on profits up to €200,000 and 25.8% above that threshold. Through the participation exemption, some investments can be completely tax-free. This enables strategic reinvestment of profits to grow your business.

Low Financial Threshold

Starting a BV requires only €1 in share capital - dramatically reduced from the previous €18,000 requirement. This low threshold, introduced with the Flex-BV in 2012, makes Dutch companies accessible to both local and foreign entrepreneurs.

Business Growth & Succession

Easily transfer ownership to family members or sell portions of your company. The BV structure simplifies business succession planning and makes partial sales fiscally attractive. Issue shares to attract investors with tangible ownership stakes.

International Reputation

Dutch BVs are globally respected business entities, lending credibility to your operations worldwide. This professional structure is well-recognized and trusted in international business circles, making it easier to establish cross-border relationships.

The public limited liability company (Dutch NV)

There are many steps to forming a public limited liability company, but with the right guidance, these actions are quick and simple.

Furthermore, as a public limited liability company, a portion of your shares will be available for purchase on the stock exchange. Be diligent about how many shares are available on the international stock exchange, as, although rare, some companies have been bought out by random members of the public. This is often achieved via mergers or acquisitions, with an acquisition sometimes being hostile.

In general, it’s wise to handle your assets with diligence. The Dutch NV is also a legal corporate entity and is therefore seen as independent of you by Dutch law.

There are by far more BVs than NVs in the Netherlands, since generally only very large corporations choose to establish an NV. Chances are that the BV is the best choice for your company. Nonetheless, we will still outline all the basic information regarding the Dutch NV.

Characteristics of the Dutch NV

The NV is a public Dutch legal entity comparable to a ‘public limited liability company’. There are some main characteristics that explain how an NV works and how it differs from other legal entities, which we will list below.

Capital & Shares

• Minimum capital requirement: €45,000
• Multiple share types available (including bearer shares)
• All shareholders get voting and profit rights
• Shares traded on public stock exchange
• Free buying and selling of shares
• Transfer restrictions possible

Governance Structure

• Formation requires notary deed
• Led by board of directors
• May need commissioner committee for supervision
• Sophisticated corporate governance structures
• Limited liability protection (if formation complete)

Shareholder Management

• No shareholder listing in Dutch register
• Can have numerous shareholders
• Ownership often widely dispersed
• Transfer of shares unrestricted

Regulatory Requirements

• Strict disclosure and reporting rules
• Complex accounting requirements
• More demanding than BV regulations
• Subject to securities exchange rules
• Regular regulatory body oversight

Financial Benefits

• Competitive EU corporate tax rates
• Public trading provides liquidity
• Access to public capital markets
• Transparency for investors

Key Differences from BV

• Higher capital requirement
• Public trading possibility
• More complex governance
• Stricter oversight requirements
• Broader shareholder base

Benefits of the Dutch NV

There are also benefits to owning a Dutch NV, but typically only under certain circumstances do these outweigh the benefits of owning a BV.

Just like a BV, an NV can have one or multiple directors. So, if you wish to start a company alone or with others, both are possible. Since the shares in an NV are not personal, they can be transferred freely.

The NV also offers personal financial protection due to its limited liability, but in the event of improper management, you can still be held accountable.

Next to that, there are several possibilities for tax deduction, such as via investment deduction, through arbitrary depreciation under certain conditions, and via Research & Development deduction.

In general, the NV is only the best choice if you aim for a large public corporation. 

Differences and similarities between the BV and NV

As you can see, there are some factors that are similar within both legal entities, whereas there are also substantial differences.

The public limited liability company is a legal form that is not very common in the Netherlands. There are approximately 2,500 companies that use the Dutch NV company as a legal corporate entity, and these are mainly large companies. This is because it is easier to raise capital (by issuing new shares) as a public limited liability company than as a private limited liability company.

With an NV, just like with a BV, the capital is raised by shareholders. The NV is a so-called capital company (as opposed to a partnership).

The big difference with a BV, however, is that with an NV, the shares do not have to be registered (although it is possible), hence the term “Naamloze Vennootschap” which translates in English to ‘Nameless company’.

This means that shares are easily transferable. The person who can show a share (although this no longer happens physically nowadays) is a shareholder, shares in the profits, and has a vote.

So, in principle, the NV does not always know who its shareholders are. The articles of association determine a large part of the rules regarding the possibility of transferring shares freely in a BV. 

Oftentimes, there are certain transfer restrictions that limit some (or all) shareholders. In such cases, the other shareholders need to give their consent when a shareholder wants to transfer shares.

Also, the other shareholders have a preemptive right to buy shares from a selling shareholder. This is not the case in an NV, where shares can be transferred freely.

Another noteworthy difference is, of course, the minimum share capital required during the incorporation of both company types.

The minimum amount for a BV is only one euro, while the NV requires 45,000 euros. This can make the NV unattainable for many entrepreneurs.

Another main difference is the public vs. private part. The NV can be listed on a public stock exchange, but a BV company only issues private shares.

Furthermore, the Dutch NV is obligated to have a board of directors and has more strict requirements, while the BV only needs a director and a shareholder.

All in all, the Dutch NV is usually only formed by (already) public companies. The BV is much more accessible for a wide variety of entrepreneurs without having to invest large amounts of money, and without the strict regulations that accompany the establishment of an NV.

However, if your company starts growing rapidly and you would like to go public at some point, you are always able to convert your BV into an NV during a later stage of entrepreneurship. 

Private or public limited liability company (BV or NV)?

The Netherlands provides unique advantages for any business to thrive, but it is vital to find the right type of company to suit your needs.

In this article, we made a distinction between a private limited liability company and a public limited liability company in the Netherlands. The main difference between these two, is that there is no distinction between your private and business assets in an unincorporated business.

You and your company are, in essence, the same entity. So, if you create debts with your business, you can personally be held accountable.

If you choose an incorporated business, you separate private and business assets and thus enjoy protection from business debts in most cases, since your business is seen as a separate entity.

Legal requirements differ between the business structures, and there are also quite extensive differences in general requirements for establishment, the way you pay taxes, and the structure of each legal entity.

In general, the business structure that is most often chosen by foreigners is the private limited liability company (Dutch BV) due to the several practical and tactical benefits of this legal entity.

Intercompany Solutions can assist you with the establishment of a Dutch company

If you would like to receive more information on starting a company in the Netherlands, please contact our experienced business advisors. We will gladly offer you the personal advice you need, which will assist you in making the perfect choice for your Dutch business.

We have many years of experience in the incorporation of Dutch companies, making it possible to incorporate and register your new Dutch company in just a few business days.

Furthermore, we can also help you out with a variety of extra services, such as administrative and secretarial assistance, filing of periodical tax returns, legal and general business advice, and many other topics.

You can contact us via the button below, or call us directly if you have any urgent matters to discuss. 

Or read more about the corporate structure comparison in The Netherlands

FAQ's

What does BV mean in the Netherlands?

BV stands for 'Besloten Vennootschap', which translates to 'Private Limited Liability Company' in English. It is a legal structure commonly used in the Netherlands to limit personal liability for entrepreneurs.

What is the liability of a BV?

The liability of a BV is limited to the company's assets. This means that the shareholders are only responsible for the amount of capital they have invested in the company, and their personal assets are protected.

What are the benefits of a BV in the Netherlands?

The main benefits of a BV in the Netherlands include limited liability, flexibility in structure, potential tax advantages, and international recognition. This makes it a popular choice for both local and foreign entrepreneurs.

Who can form a BV in the Netherlands?

Anyone can form a BV in the Netherlands, including both Dutch and foreign individuals or entities. There are no residency requirements, and entrepreneurs from within and outside the European Union can establish a BV.