Vat rules
General introduction to VAT in the European Union
The Netherlands are a member of the European Union. Within the European Union, several directives concerning VAT apply. Most important is the VAT directive, which contains the basic VAT system for member states of the European Union. Within the margins of this directive, each member state has room for their own interpretation. In other words, the basic idea of VAT regulation is the same. Especially with regard to deliveries and the provision of services between member states of the European Union, the same basis applies.
The following countries together form the European Union:
Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.
Within the European Union, different VAT regulations apply for private persons than for entrepreneurs.
When you provide goods or services to foreign customers, it is important that you are attentive of VAT regulations. The same holds when you purchase goods or services from foreign entrepreneurs. After all, you do not want to pay VAT that you cannot re-claim. To this end, certain rules are set down in laws, which determine whether you owe Dutch or foreign VAT.
Supplies to other EU countries (IC-supplies)
An intra-community supply takes place when:
· goods are physically transported to another EU-country, and
· the client provided a valid EU VAT#
· the supplies has proof of transport
If one of these two requirements is not met, 19% Dutch VAT according has to be charged (or 6% if applicable).
The intra-community obtaining of the goods in the EU-country of destination is a VAT-taxable event in that country. This means that the recipient of the goods has to report the domestic VAT in its periodical VAT tax-return. Most of the time this VAT is deductable in the same VAT tax-return, as a result of which no VAT is due at all.
Suggested additional wordings on the invoice for this purpose:
“0% Dutch VAT, IC-supply, Table II, post a.6, Dutch VAT act”
or
“0% Dutch VAT, IC-supply, art. 138 VAT Directive”
Export supplies
According to the Dutch VAT act, the supply of goods that have not been imported into the free circulation of the EU (T1-material) and the supply of goods that will be exported from the EU to a country outside the EU (or placed in a customs bonded warehouse) are subject to the zero VAT rate, provided some conditions are met. Furthermore, services with regard to the above-mentioned goods (for instance transportation services) are also subject to the zero VAT rate.
Suggested additional wordings on the invoice for this purpose:
For T1-material: “0% Dutch VAT, T1-material, Table II, post a.1, Dutch VAT act”
For Export: “0% Dutch VAT, export supply, Table II, post a.2, Dutch VAT act” or
“0% Dutch VAT, export supply, art. 146 VAT Directive”
Local Dutch supplies
Supplies of goods or services taxable in the Netherlands performed by an entrepreneur who is established outside of the Netherlands (within or outside the EU) to an entrepreneur that is established in the Netherlands are subject to a reverse charge mechanism (article 12, sub 3, Dutch VAT act). This means that the supplier is not liable for the VAT, but the customer is. The VAT has been shifted to the customer. In this case the non-resident entrepreneur does not have to charge Dutch VAT. So there should be no VAT amount on the invoice!
Suggested additional wordings on the invoice for this purpose:
“VAT to be declared by customer, reverse charge mechanism, article 12-3, Dutch VAT act”
The Dutch customer has to admit the supply in his periodical VAT tax-return and has to calculate the VAT on the supply himself. The customer can deduct the VAT due to the reverse charge supply in the same VAT tax-return, in case he has the right to deduct input VAT. In that case no VAT is due at all.
Supplies to foreign customers in the Netherlands are liable to VAT!