Do you need to register for VAT in the Netherlands? Let our expert team take care of this.
The value added tax (abbreviated VAT) is an indirect tax borne by the final consumer of the goods / service. VAT is a tax charged on cascade for each company that participates in the economic cycle to manufacture a product or provide a service within the scope of taxation. After the right of deduction, taxable economic agents who participated in the economic cycle turn the VAT balance to the state budget.
In Netherlands the standard VAT rate for the year 2013 is 21% and for certain goods and services (food, medicines, transport, cultural and artistically actions etc) the VAT rate is set to 6%. The export and intra-community supplies are categorized with a tax rate of 0% and for financial and medical services there is no VAT tax.
Among the elements of the VAT which are set out in legislation for a better understanding and application are:
1. name of the tax appears as value added tax and suggests very clear on who applies
2. taxable persons are those who run an independent economic activity whatever the purpose or results of that activity. To become a taxable person must register as taxable person for VAT tax purposes.
3. the material is the basis for calculating the taxable value added tax and represents :
- the selling price of goods and services when the tax rate is determined by the supplier;
- purchase price of the goods when reverse charge applies when the tax is determined by buyer;
- the purchase price of the goods or services expenses when the supply takes place by itself;
- the customs value of the goods when the reverse charge applies, according to the tax determined by the customs authorities;
- the profit margin understood as the difference between the selling price of goods and their acquisition cost when applying the special tax calculation .
4. the scope refers to the operations that are subject to taxation (taxable transactions) and are based on five principles: territoriality, the products’ origin, the goods’ destination, chargeability.
5. tax bearer is the consumer of goods and services
6. the VAT tax source is the value recovered from the sale of goods and services. For determining VAT payable is applied the principle of self-compensating which provides that the payer has the right to recover VAT incurred in the purchase of goods and services for taxable transactions.
7. the tax unit is the unit of measure for expressing the size of taxable transactions .
The entrepreneurs who run their businesses in Netherlands and produce taxable supplies in this country are obliged to apply for register of the VAT. This is also applied for supplies inside the European Community, acquisitions inside the European Community or export supplies.
This obligation is also valid for the Non-Dutch entities, which have the right to assign a VAT representative with joint and several liabilities, or a VAT agent with no liability.
For entrepreneurs who don’t have a business registered for VAT in this country, but sell and delivers goods from outside the border to customers from Netherlands that are not paying the VAT tax, it is needed to require and account for VAT in Netherlands when the sales value more than 100,000 Euros.
For a business which is not established in a EU country, but supplies electronically supplied services to customers in this country which are not VAT registered, Netherlands is considered the place of supply and the VAT must be registered. However, when the entrepreneur also runs businesses in other EU countries, he has the right to register the VAT in any other country where he established his business, in case several requirements are met.
In Netherlands, there certain situations when the VAT due may be shifted to the customer, for example:
- Triangulation: this situation may be applied for intermediaries that provide goods for a Dutch customer when the goods are purchased from a EU country other than Netherlands of the intermediaries’ origin country. In this case, the VAT comes in Dutch customer’s duty.
- Call-Off Stock: this applies when an entrepreneur stores stock from another EU country at the customer’s premises or at premises under the customer’s control in. In this case, both parties (customer and supplier) may account for an intra-community transaction when the goods are sold, instead of reporting an intra-community acquisition which is implicitly followed by a local supply.