A Sellers Guide To VAT in The Netherlands
Are you thinking of trading goods or services into The Netherlands? We bring you an overview of VAT as a non-EU and EU seller.
The Netherlands has a population of over 17 million and predicted online sales of around €25 billion in 2018. It is often overlooked as a European market to expand into.
SimplyVAT brings you the key facts around VAT in The Netherlands and how you can stay compliant when expanding your business into this flourishing market.
- VAT in the Netherlands is called BTW
- There are 3 VAT tariffs in the Netherlands
1.The standard rate is 21%
2.The reduced rate of 6% applies to the following items (Please note this is set to increase to 9% which is likely to come into force on the 1st January 2019)
3. 0% Tariff Applies to foreign businesses who conduct business in foreign countries from the Netherlands (Rules differ dependant on whether you are a non-EU or EU company)
Please click here to see items exempt from VAT (Please check whether this applies to non-domestic business)
EU BUSINESS SELLING TO EU CUSTOMERS
If you are a European business, or a sole trader, and you are VAT registered in your home country then the Distance selling Rules Will Apply. As an EU business, The Netherlands does not differentiate between having a business established in the Netherlands or an EU established business (i.e. France, Germany).
- The distance selling threshold is €100,000 in the Netherlands.
Find out if you have hit your threshold
This means if you’re an EU business using the distance selling rules you don’t need to pay the rate of VAT in the Netherlands until your annual net sales hit €100,000 when selling to customers in the Netherlands.
- The Intrastat Threshold for Arrivals is €1,000,000 and Dispatches is €1,200,000 in a calendar year
- VAT returns are usually filed quarterly though depending on your turnover you can file monthly or annually.
- You can reclaim Dutch VAT from sales in the last 5 years
- You must make your claim to the tax authorities via a digital form or utilise the expertise of VAT agent
If you are a business established outside of the EU you may appoint a tax representative (Fiscal Representation) or you may have the option to register directly in the Netherlands for VAT.
- You aren’t required to have Fiscal Representation – though you may have one for peace of mind.
- Submit your claim before the 1st July in the year following the year which you are claiming refund of VAT.
If you are supplying goods to private individuals or foreign businesses:
- Then you must charge VAT
- You will then be required to register for VAT and file VAT returns
For Business to Customer (B2C) transactions – when you sell to a customer with no VAT number then you add the applicable tax rate to your sales.
CROSS-BORDER BUSINESS TO BUSINESS
If you don’t usually sell to the Netherlands and you are a business which is VAT registered in a European member state selling to a Dutch VAT registered business, then the Reverse charge Mechanism may be applicable.
You are a German entrepreneur with a German VAT number, you have goods in Rotterdam and you supply these to a business established in the Netherlands, who is also VAT registered in the Netherlands. The VAT is reverse-charged to your client if you both have a valid VAT number. You then issue an invoice without VAT and you state ‘VAT reverse-charged’ on the invoice.
The Reverse Charge - How does it work?
The reverse charge mechanism is for intra-EU Business to Business sales. It was created in the European Union to simplify cross EU border trade.
The reverse charge moves the responsibility for recording the VAT transaction to the buyer from the supplier for those goods or service’s.
As an overview the main point of reverse charging in the EU was to simplify Intra-Eu community supply of goods.
- The buyer of the goods or services will need to declare the VAT on both the purchase (input VAT) and the sale (output VAT) in their VAT return. An EC sales list also needs to be filed to document the intra community supply.
It is to reduce the obligation for sellers to VAT register in the country where the supply is made across all 28-member states.