January 1993 marked the introduction of a single market in the European Union that introduces a new VAT control system for intra-community trade. The most important benefit brought by the single market implementation is the reduction of the administrative burden of companies. According to the new VAT system, intra-community dispatches of goods and services are exempt from VAT in the country of expedition, such as Netherlands, when they are delivered to a company subject to taxation in another member state of the European Union that will account for VAT at arrival.
VAT Information Exchange System
This VAT system
obligates all Dutch taxable persons
that make such supplies to check whether their customers in another European Union country owns a valid VAT identification number. Therefore, a computerized VAT Information Exchange System also known as VIES
was set up. It allows persons within the European Union to check instantly if a VAT number is valid.
The VIES enables companies to confirm immediately if the the VAT number of the trading companies, and helps VAT administrators to control accurately the intra-community trade in order to detect irregularities.
In Netherlands, a company that registered and obtained a VAT number is automatically registered within the VIES system. It is an automatic procedure available for European Countries.
VAT registration process in Netherlands
In Netherlands, registering for VAT is a process that involves an application for registration to the Dutch Tax Authorities
and the submission of the registration certificate and articles of association. The Tax Authority will emit a questionnaire that the company needs to fill. After all documents were submitted with the Tax Authority, the registration may take approximately three week to complete.
Intra-community activities in Netherlands
If you open a company in Netherlands and choose to have intra-community activities, meaning trading with a company open within the European Union, then the intra-community rules will apply. If the company imports goods from another EU member, then the Dutch VAT will apply. A zero rate VAT applies when supplying goods to a country member of EU, activity subject to a 0 rated VAT.
In order for an intra-community trade to be validated in Netherlands, as well as in any other European Country, the Dutch seller must prove that the shipped goods have reached the destination and that they are no longer in Netherlands. The proof can be made by initialed waybill or a payment from a foreign country.