The Netherlands uses a value-added tax system (short: VAT). This system is very similar to the system that is used in other states 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.
If products are imported from outside of the EU, this VAT rate may also apply. Holland also has a lower rate. This rate is 6% and it applies to specific goods and services, for instance, food products, medicine, art, antiques, books, entry to museums, zoos, theatres, and sports. This rate will be increased to 9% as of 2019.
Read here for more information on the Dutch tax system.
VAT exemptions Netherlands
Of course, the Netherlands also has a number of exemptions. Visible exports are among those. These are zero-rated. There are also some exemptions for special goods and services, mainly medical, cultural, and educational services. If VAT exemptions apply, you don’t have to pay the tax, and you cannot deduct it.
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 it is > 2 years old), healthcare services, childcare, care services and home care and others.
Are there any other tax exemptions in the Netherlands?
These aren’t the only tax exemptions in Holland. Other tax exemptions are sports organisations 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.
VAT rate for foreign entrepreneurs
If you are doing business in Holland, but your business is established outside of the Netherlands, 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 Holland. Reverse-charging VAT is possible if your client is an entrepreneur of 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.
More information about the Holland 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 setting up your business in Holland.
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.