1 GLOBAL INDIRECT TAX Netherlands Country VAT/GST Essentials kpmg.com TAX
2 b Netherlands: Country VAT/GST Essentials
3 Netherlands: Country VAT/GST Essentials Contents Scope and Rates 2 What supplies are liable to VAT? 2 What is the standard rate of VAT? 2 Are there any reduced rates, zero rates, or exemptions? 2 Registration 3 Who is required to register for Dutch VAT? 3 Are there penalties for not registering or late registration? 3 Are there any simplifications that could avoid the need for an overseas company to register for VAT? 3 VAT Grouping 4 Is VAT grouping possible? 4 Can an overseas company be included in a VAT group? 4 Returns 5 How frequently are VAT returns submitted? 5 Are there any other returns that need to be submitted? 5 VAT Recovery 6 Can I recover VAT if I am not registered? 6 Does your country apply reciprocity rules for reclaims submitted by non-established businesses? 6 Are there any items that you cannot recover VAT on? 7 Invoices 11 What do I have to show on a tax invoice? 11 Can I issue invoices electronically? 11 Is it possible to operate self-billing? 11 Transfers of Business 12 Is there a relief from VAT for the sale of a business as a going concern? 12 Options to Tax 12 Are there any options to tax transactions? 12 Head Office and Branch Transactions 12 How are transactions between head office and branch treated? 12 Bad Debt 12 Am I able to claim relief for bad debts? 12 Anti-Avoidance 13 Is there a general anti-avoidance provision under VAT law? 13 Penalty Regime 13 What is the penalty and interest regime like? 13 International Supplies of Goods and Services 8 How are exports of goods and services treated? 8 How are goods dealt with on importation? 10 How are services which are brought in from abroad treated for VAT purposes? 10 All information reflected in this document was obtained/summarized from KPMG in Netherlands as of October 2011.
4 2 Netherlands: Country VAT/GST Essentials Scope and Rates What supplies are liable to VAT? Value-added tax (VAT) is due on any supply of goods or services made in the Netherlands, where it is a taxable supply made by a taxable person in the course or furtherance of a business carried on by said person. Supply includes all forms of supply. It is not restricted to the provision of goods and services by way of sale but can equally apply to other forms of transaction. Supply does not include anything done otherwise than for a consideration. However, certain transactions are not subject to Dutch VAT, for example supplies within a VAT group or a sale of a business as a going concern. Furthermore some transactions are deemed to trigger a supply (such as the application of self-produced or constructed goods by a (partly) exempt VAT entrepreneur). What is the standard rate of VAT? The standard rate of VAT is 19 percent. Are there any reduced rates, zero rates, or exemptions? Yes. There is a reduced rate of six percent for the supply of certain goods and services, including: food and non-alcoholic drinks books, newspapers, and journals on paper (not in digital form) water supplies medicines and aids for the handicapped passenger transport hotel and camping accommodation admission to e.g. circuses, zoos, public museums, cinemas etc. agricultural product/services some labor-intensive services. The list of exemptions includes: Exemptions with input tax recovery (zero rate supplies) export supplies supply of goods within a VAT warehouse services regarding goods that are not yet imported. Exemptions with no input tax recovery (exempt supplies) health and welfare certain cultural activities education supplies by non-profit institutions on the condition that no distortion of competition will occur as a result of the exemption financial, banking, and insurance services certain games of chance certain postal services non-commercial activities of public radio and television broadcasting organizations land (certain transactions are automatically taxable with VAT and there is an option to tax land transactions in case certain requirements are met).
5 Netherlands: Country VAT/GST Essentials 3 Registration Who is required to register for Dutch VAT? Dutch Entities If your business makes taxable supplies in the Netherlands for which you have to account for the VAT due, intra- Community supplies, intra-community acquisitions, or export supplies, you will be required to register. No VAT registration threshold exists in the Netherlands. Non-Dutch Entities The registration rules that apply to Dutch entities also apply to foreign entities that are making taxable supplies in the Netherlands. To deal with its VAT affairs an overseas business may appoint a VAT representative with joint and several liabilities, or a VAT agent with no liability. If your business is not registered for VAT in the Netherlands but sells and delivers goods from abroad to customers in the Netherlands who are not VAT registered (distance sales), where the value of those sales exceeds a threshold of EUR100,000 your business is required to register and account for Dutch VAT. If your business is established outside the European Union and you supply electronically supplied services to customers in the Netherlands who are not VAT registered, then the place of supply is in principle the Netherlands. You will then have to register for VAT in the Netherlands. If, however, you supply the same services to customers in other EU Member States you can opt to register for VAT in one EU Member State rather than all of them in case certain requirements are met. In this case you still have to account for VAT on supplies you make at the rate prevailing in the country of your customer but you only have to deal with one EU Member State for filing and payment purposes. Are there penalties for not registering or late registration? There are no penalties for failing to register for VAT promptly. However, your business may incur late payment penalties and interest on any outstanding VAT. Are there any simplifications that could avoid the need for an overseas company to register for VAT? If your business makes supplies of goods or services in the Netherlands for which you have to account for the VAT due, then you are required to register. However, it is possible to avoid registering and accounting for Dutch VAT when making certain supplies. In the following examples the obligation to account for the VAT due can be shifted to your customer provided that your customer is registered for Dutch VAT. Triangulation If your business is an intermediate supplier to a Dutch buyer of goods which you purchase from a business in an EU Member State other than your own and other than the Netherlands and the goods are delivered from there to the Netherlands, VAT due can be accounted for by the Dutch customer. Call-Off Stock When you store stock from another EU Member State at your customer s premises or at premises under the customer s control in the Netherlands a simplification can be applied if the supplier is not registered for VAT purposes in the Netherlands. Instead of reporting a deemed intracommunity acquisition followed by a local supply, the supplier and customer can account for an intra-community transaction at the moment that the goods are actually sold.
6 4 Netherlands: Country VAT/GST Essentials VAT Grouping Consignment Stock When you store stock in consignment in the Netherlands, the eventual supply to the consignee is treated as an intra-community supply (if the goods are transported to the consignee from another EU Member State) and the consignee accounts for VAT on the supply as an acquisition. Reverse Charge If your business is not established in the Netherlands and supplies goods/services taxable with VAT to a VATentrepreneur or a legal entity established in the Netherlands, the reverse charge mechanism is applicable. The Dutch company/legal entity then has to account for the VAT due. Bear in mind that these provisions are subject to particular requirements and so you should check carefully whether you comply with them. Is VAT grouping possible? Yes. VAT grouping is possible if there are financial, economic and organizational links between VAT entrepreneurs. The tax authorities may also instruct VAT group treatment. If financial, economic and organizational links exist, it is not possible for a VAT entrepreneur to leave the VAT group. Provided that all other conditions are met, it is possible to apply for a VAT group retroactively. Can an overseas company be included in a VAT group? No. Only businesses that are established in the Netherlands may join a VAT group. However, fixed establishments of foreign companies are regarded as businesses established in the Netherlands and can join a Dutch VAT group, thereby under circumstances, creating a de facto VAT group including the overseas head office.
7 Netherlands: Country VAT/GST Essentials 5 Returns How frequently are VAT returns submitted? Most VAT registered businesses are required to submit VAT returns on a quarterly basis. On request VAT returns may be filed on a monthly basis. If your tax liability does not exceed EUR1,883 per year, you can file VAT returns on an annual basis. Dutch VAT registered businesses that are generally required to file quarterly returns can opt to file monthly returns, e.g. because they are generally in refund position. Please note that Dutch established companies and foreign companies registered via a fiscal representative with a general license are obliged to submit VAT returns electronically. Failure to submit VAT returns and settle any outstanding VAT payments on time may result in a penalty. For not making the payment in time, the penalty may be up to a maximum of EUR4,920. Are there any other returns that need to be submitted? European Sales List (ESL) If your business supplies goods, which are shipped from the Netherlands to VAT registered businesses in other EU Member State states, and these supplies qualify as intra- Community supplies, you are required to complete ESLs. From 1 January 2010 onwards, the supply of B2B services from the Netherlands to customers established in other EU Member States on which the new main rule applies must also be included in the ESLs. If the amount of intra-community supplies of goods exceeds EUR100,000 per quarter, the ESLs need to be completed on a monthly basis. The cross border supplied B2B main rule services may be reported on a monthly or quarterly basis. In certain circumstances the tax authorities may allow a business to submit ESLs on an annual basis. Dutch established companies and foreign companies registered via a fiscal representative with a general license must submit ESLs electronically. Non-compliance with the ESL obligations may result in a penalty of up to EUR4,920 per return. Intrastat Supplementary Declarations VAT registered businesses with a value of dispatches or arrivals to or from other EU Member States, which exceed the thresholds of EUR900,000 per calendar year for dispatches and EUR900,000 per calendar year for arrivals) must complete supplementary declarations (statistical returns) each month. Non-compliance with Intrastat reporting requirements may result in a penalty.
8 6 Netherlands: Country VAT/GST Essentials VAT Recovery Can I recover VAT if I am not registered? Yes. If you are established in another EU Member State then you should file an electronic refund request (based on the Directive 2008/9/EEC) with the tax authorities in your own Member State. If you are a non-eu business you should recover the VAT under the 13th Directive. Under both of these provisions there are time limits for making claims. EU businesses should file the refund request ultimately 30 September of the following year. Non-EU businesses should file the refund request within six months after the year during which the Dutch VAT was charged. However, if the claim term has expired, the Dutch tax authorities will generally handle the reclaim if the request is submitted within five years after the calendar year in which the VAT was incurred. A consequence of filing a reclaim after the formal due date is that you cannot make an appeal against the decision of the Dutch tax authorities. VAT refund requests regarding the years Entrepreneurs established in other EU Member States than the Netherlands may want to reclaim Dutch VAT regarding the years 2006 till Entrepreneurs established in Belgium, Bulgaria, Cyprus, Greece, Hungary or Sweden must use the paper form Application VAT refund which can be downloaded from the Dutch tax authorities website. Furthermore a Certificate concerning the capacity of the taxpayer, which states that you are in fact considered an entrepreneur in your country of establishment should be included. Applications and the enclosures can be sent to: Belastingdienst Limburg/Kantoor Buitenland Postbus DJ Heerlen Netherlands If you are an entrepreneur established in any other EU country than the one listed above, you must submit your Dutch VAT refund request with respect to the years 2006 till 2009 digitally, using the web portal of the tax authorities in your own EU member state. Does your country apply reciprocity rules for reclaims submitted by non-established businesses? No, the Netherlands do not apply reciprocity rules.
9 Netherlands: Country VAT/GST Essentials 7 Are there any items that you cannot recover VAT on? Yes. There are certain items that you cannot recover VAT on. For example: Exempt supplies: where VAT relates only to VAT exempt supplies, there is no possibility to recover input VAT. Where VAT relates to both taxable and exempt supplies you need to make an apportionment. Non-business (including private) activities: input VAT on non-business activities cannot be recovered. Input VAT on employee benefits-in-kind should not be recovered if the benefits exceed a threshold of EUR227 per employee per year. Where VAT relates to business and non-business activities, an apportionment is required (except for capital goods, for which special rules apply). Motor cars: if a car is used for business and private/ non-business purposes, the input VAT is in principle recoverable. If you would file Dutch VAT returns, you should report an adjustment at the end of the year to account for the private/non-business use of the car. For Directive 2008/9/EEC or 13th Directive reclaims, practice is that all input VAT should be reclaimed in the application, after which the Dutch tax authorities will correct the reclaimed VAT with a fixed percentage. Business entertainment: VAT is generally recoverable on business entertainment costs, but an adjustment at the end of the VAT year may be applicable. Goods sold under one of the margin schemes for second hand goods. There are a number of schemes which provide for VAT to be accounted for on the goods sales margin, but do not allow VAT recovery on the purchase of those goods. Expenses: VAT can be recovered only if invoiced to a taxable person. Where invoices and bills are made out to an employee, the VAT is not deductible. Food and Drink: VAT incurred on food or drink supplied in restaurants, bars, hotels, etc. cannot be recovered.
10 8 Netherlands: Country VAT/GST Essentials International Supplies of Goods and Services How are exports of goods and services treated? Goods If you sell and supply goods from the Netherlands to a customer who is registered for VAT in another EU Member State and the sale involves the removal of those goods from the Netherlands (either by you or your customer) to that EU Member State, then you do not need to charge VAT and may zero rate the supply as an intra-community supply. You must obtain your customer s VAT number and quote it on your invoice. You should also obtain evidence of the goods removal from the Netherlands. If you sell and supply goods from the Netherlands to a customer who is not registered for VAT in another EU Member State, you will have to charge Dutch VAT. If your sales exceed a certain threshold for that EU Member State you may have to register in the EU Member State under what is known as the Distance Selling Scheme. If you export goods to a customer (business or private) outside of the EU then you do not need to charge VAT but, as for intra-community sales, you should make sure that in all cases you keep proof of dispatch/delivery to support your zero rating. Services If you are a Dutch established business and supply services to a foreign business customer (B2B), in general the supply of services is taxable in the country of the recipient under the reverse charge mechanism. If you, however, supply services to a private consumer (B2C), the services are in general taxable in the country of the supplier and therefore subject to Dutch VAT. The following exceptions apply to the B2B and B2C main rules as described above: Services involving real estate (taxable in the country where the real estate is located). Restaurant and catering services (taxable in the country where these services are performed. Other rules apply if these services are performed on board a ship, aircraft, or train). Passenger transport (taxable in we country here the transport services are actually performed). Services with regard to cultural, artistic, sporting, scientific, educational, entertainment, and similar activities, along with the ancillary services (taxable in the country where those activities are physically carried out). With effect from 1 January 2011, this exception applies to services performed for VAT entrepreneurs only with respect to admission to the aforementioned events and the appurtenant admission-related services. Nothing changed as of 1 January 2011, with regard to services performed for non-taxable persons. Short-term hiring of transportation vehicles (for ships maximum 90 days/for other means of transport maximum 30 days; taxable in the country where the vehicle is actually put at the disposal of the customer.
11 Netherlands: Country VAT/GST Essentials 9 The following exceptions apply to the B2C main rule: Intermediary services (taxable in the country where the underlying transaction is taxable). Intra-Community transport of goods (taxable in the country of departure). For other types of goods transportation for non-taxable customers, the place of service is the place where the transportation is actually performed. Transportation-related services (taxable in the country where the services are physically carried out). Services involving movable tangible goods (taxable in the country where the activities are actually carried out). Services performed electronically by a VAT entrepreneur not established in the EU to non-taxable customers (taxable in the country where the customer of the service is located). The following services performed for non-taxable customers that are established or resident outside the EU are taxable in the country where the customer is established: the transfer of licenses and similar rights; advertising services; services performed by consultants, as well as dataprocessing and information-provision services; the obligation to refrain, in whole or in part, from pursuing a business activity; banking and insurance services; supply of staff; hiring out of movable property, with the exception of means of transport; operating natural gas and electricity-distribution systems; telecommunications services; radio and television broadcast services; and services performed electronically.
12 10 Netherlands: Country VAT/GST Essentials How are goods dealt with on importation? When goods are imported into the Netherlands from outside the EU, import VAT and customs duty may be due. There is a simplification available that allows import VAT to be accounted for and recovered through the VAT return simultaneously rather than being paid at import and then recovered at a later date. It is necessary to apply to the local tax authorities for a license (article 23 license) to operate this procedure. A foreign entity can only obtain a license if he/she first appoints a fiscal representative who is established in the Netherlands. The representative could either be a third party or a local affiliated company (BV or NV). How are services which are brought in from abroad treated for VAT purposes? If you are a VAT entrepreneur established in the Netherlands or a legal entity having a VAT identification number and you purchase services from suppliers established outside the Netherlands, you will as a main rule be required to apply the reverse charge. This is intended to take away any VAT advantage of buying those services from outside the Netherlands. Under the reverse charge you are required to account for a notional amount of VAT as output tax on your VAT return covering the period in which you received the invoice and you recover this VAT as input tax on the same return (insofar allowed, see VAT Recovery). If you are able to recover all of your VAT the reverse charge has no cost effect and is a VAT compliance matter only. However, if you are a (partly) VAT exempt business there is likely to be a VAT cost depending on the level of recovery allowed under your partial exemption method. Certain specific services for which the B2B main rule does not apply may result in another place of supply of the service than the Netherlands. This could lead to VAT obligations for the supplier or recipient in the country in which the service is taxable. For an overview of the exceptions to the B2B main rule please refer to the section How are exports of goods and services from the Netherlands treated?
13 Netherlands: Country VAT/GST Essentials 11 Invoices What do I have to show on a tax invoice? If you have to issue a tax invoice it should contain the following data: Date of issue. A sequential invoice number: If the invoice adjusts an earlier invoice (such as, a credit note), unambiguous reference should be made to the original invoice. Supplier VAT number. Customer VAT number in case of intra-community supplies and in case the reverse charge mechanism applies. Supplier name and address. Customer name and address. The quantity and nature of the goods/services supplied. Tax point (date of taxable supply): If an advanced payment is received prior to the date the invoice is issued then the date of the advanced payment must be shown. The taxable amount per rate. Unit price (exclusive of any VAT). Rate of any discounts (if not included in the unit price and if applicable). The VAT rate applicable. The amount of VAT payable in Euros (EUR). Basis for exemption or reverse charge mechanism (if applicable): If an exemption applies or if the customer is liable to pay the tax, the invoice must state that the supply is exempt or covered by the operation of the reverse charge procedure. If an intra-community supply is involved this must also be stated on the invoice. No specific legal reference is necessary, but the description of the supplies must be clear enough to determine the applicability. New means of transport/margin schemes (if applicable). VAT number, name, and address of fiscal representative (if applicable). Local language requirements: Invoices may be drafted in any language, but a translation may be required in case of an audit. Exempt and zero rated supplies: Only if certain conditions are fulfilled an entrepreneur does not have to issue invoices for exempt supplies. Can I issue invoices electronically? Yes. Suppliers are free in choosing form and means by which electronic invoices are drafted and sent. It is thus permitted to issue electronic invoices without any digital signature. No prior approval of the tax inspector is required to start issuing electronic invoices; it is however required to obtain the consent of the recipient of the invoices. This consent will be inferred if a recipient processes and pays invoices received electronically. Is it possible to operate self-billing? Yes, provided you have the agreement of your customer before doing so.
14 12 Netherlands: Country VAT/GST Essentials Transfers of Business Is there a relief from VAT for the sale of a business as a going concern? Yes. If you sell your business as a going concern then VAT may not be due. There are certain conditions to satisfy. Options to Tax Are there any options to tax transactions? Yes. There is an option to tax certain types of transactions in immovable property, if certain conditions are met. Head Office and Branch Transactions How are transactions between head office and branch treated? If your head office makes a charge to its branch or vice versa it is not treated as a supply for VAT purposes in the Netherlands. Please note that certain formalities need to be met in case goods are transferred from abroad to the Netherlands and vice versa. Bad Debt Am I able to claim relief for bad debts? If it is clear that the debtor is not going to pay, VAT can be claimed on the unpaid element. The supplier should be able to prove that sufficient attempts were made to receive payment or should have proof that the customer is bankrupt (for example a letter from the liquidator). Furthermore, the debt should be written off in the statutory accounts. If the customer later pays in full or part, further adjustments are required.
15 Netherlands: Country VAT/GST Essentials 13 Anti-Avoidance Is there a general anti-avoidance provision under VAT law? Yes, however it is seldom applied successfully. There are several specific anti-avoidance schemes for branches, such as: sale of high-risk goods such as car parts and the complete range of land vehicles such as cars, motorcycles, motor bikes and tractors, all telecommunications equipment, all computer hardware and software, and all image and sound carriers supply of staff construction work. Penalty Regime What is the penalty and interest regime like? When the taxpayer does not file the return on time or does not make a payment on time, the tax authorities impose a fine. The amount of the fine depends on the number of times the tax payer is late to file the tax return and/or to make a payment. Late filing of VAT return: no penalty if the VAT return is filed within seven days after due date otherwise: a penalty of EUR56 in extraordinary cases (recurrent omissions): a penalty of EUR123 late or no payment of VAT due in principle: 2 percent of the unpaid amount to a maximum of EUR4,920 and to a minimum of EUR50 in extraordinary cases (recurrent omissions): a fine up to EUR4,920 no penalty if the VAT is paid within seven days after the due date and the VAT for the previous return period was paid in time.
16 The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation KPMG International Cooperative ( KPMG International ), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International. Designed by Evalueserve. Publication name: Netherlands Country VAT/GST Essentials Publication number: Publication date: January 2012