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Almost every entrepreneur in the Netherlands must calculate and add VAT (turnover tax, BTW) on the sales price of the products and services they provide. There are various VAT rates. The VAT on business costs is usually deductible.
Please note: Different VAT rules apply to non-resident businesses that provide goods or services to customers in the Netherlands or incur costs over which they are charged turnover tax in the Netherlands.
Are you an entrepreneur for VAT purposes
After you have registered your business with the Chamber of Commerce (KVK), the Dutch Tax and Customs Administration will assess if you are an entrepreneur for VAT purposes and let you know. That is normally the case if you operate a company or work for yourself (self-employed professional or freelancer). Because the conditions for VAT are different from those for income tax, it could be that you are considered an entrepreneur for VAT, but not for income tax purposes.
As of 1 January 2020 there have been be some changes in VAT numbers. Sole proprietors such as self-employed professionals now have 2 VAT numbers: a VAT identification number (btw-id) and a VAT tax number.
If you are a sole proprietor, the KVK will send on your details to the Dutch Tax and Customs Administration, and they will send you your VAT numbers. All other legal structures can receive their VAT-number directly upon registration with the KVK, provided they have given all the details needed by the Tax and Customs Administration when registering. You must indicate your VAT identification number (btw-id) on all of your invoices.
VAT is calculated on the price and all corresponding costs for your goods or services. This includes all shipping costs, travel costs, telephone costs, packaging costs (except refundable deposits) and similar.
Settling received and paid VAT
You must pay the VAT you have received from your customers to the Dutch Tax and Customs Administration. You may deduct the VAT you had to pay to your suppliers. You pay VAT on the difference between your purchase price (including costs) and selling price. You calculate the VAT on the total of price and all costs. The Dutch Tax and Customs Administration provides an example of a VAT calculation (in Dutch).
In some cases, you do not have to charge VAT to your customers. For example, if the goods or services you provide are exempt from VAT, such as childcare and the services of funeral directors.
VAT in your accounts
There are requirements with which your VAT administration must comply. You must, for example, maintain a summary of all sent and received invoices. Invoices that you send, must be numbered in ascending order. Your administration must also show whether you have paid or received VAT. Goods and services with different VAT rates are best kept separate within your administration. If this is too difficult, you may share the turnover across the various rates on the basis of purchases.
Filing your VAT return
You must complete your VAT return digitally. The Dutch Tax and Customs Administration will let you know when you must file your VAT return and when to make the VAT payment: each month, each quarter or each year. Usually, you will file your VAT return once a quarter. Make sure that you file your return and make the payment on time. If you have paid too much or too little this year or one of the previous 5 years, you can send in a return adjustment (suppletie). If you are entitled to a VAT restitution, in some cases you may settle this with payroll taxes you owe.
VAT regarding outsourcing of work (reverse charge)
If you outsource work to a subcontractor, they normally have to pay the VAT to the Dutch Tax and Customs Administration. However, in some cases and in some sectors (construction, shipbuilding and cleaning sector) there is a VAT reverse charging mechanism: this means you will have to include this VAT in your return and eventually pay it. If this reverse charging mechanism applies to goods or services you supplied, you have to indicate this on your invoice.