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.
VAT rates in the Netherlands
The Netherlands has several different VAT rates and a list of goods and services that are VAT-exempt. The main, general Dutch VAT rate is 21% and had been so since 2012. This rate applies to most goods and services.
There is a special VAT rate of 6% 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 rate of the VAT is applied to items that are not consumed in the Netherlands. If they are shipped to and consumed outside of 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
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.
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.
Please contact our Dutch agents 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.