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Are you an entrepreneur in the Netherlands and do you practice your profession or run a company independently? In almost all cases you must calculate and add VAT (turnover tax, btw) on the sales price of the products and services you provide.
The legal form (for instance private limited company bv or public limited company nv) of your business makes no difference. Foundations and associations also pay VAT if the Dutch Tax and Customs Administration (Belastingdienst) considers these entities entrepreneurs. There are various VAT rates in the Netherlands. The VAT on business costs is usually deductible. You do not need to pay VAT if you only carry out exempt activities or if you make use of the small businesses scheme (kleineondernemersregeling, KOR).
Please note: Different VAT rules may apply to non-resident businesses doing business 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 (Belastingdienst) will assess if you are an entrepreneur for VAT purposes and let you know. This is normally the case if you operate a company or work for yourself (self-employed professional or freelancer). The criteria for being an entrepreneur for VAT purposes are different than those for income tax purposes. It could be that you are considered an entrepreneur for VAT purposes, but not for income tax purposes. Are you an entrepreneur for VAT purposes (in Dutch)? You will receive 2 VAT numbers: a VAT identification number (btw-id) and a VAT tax number (omzetbelastingnummer). You must indicate your VAT identification number (btw-id) on all of your invoices. You must also keep records of all invoices you have sent and received.
Calculating VAT in the Netherlands
There are three VAT rates: 0%, 9% and the standard VAT rate of 21%. The VAT rate you charge depends on the goods and services you offer:
- For certain services the rate is 9%. For example for hairdressers and bike repair shops.
- For certain goods the rate is 9%. For example food, medicines and books.
- Services with a 0% VAT rate include among others international public transport.
- Goods with a 0% VAT rate are for example goods you supply to an entrepreneur in a different EU country.
- The general tariff of 21% applies to all other products and services.
Settling received and paid VAT
You must pay the VAT you have received from your customers to the Dutch Tax and Customs Administration (Belastingdienst). You may deduct the VAT you had to pay to your suppliers. So, you pay VAT on the difference between your purchase price (including costs) and selling price. You calculate the VAT on the total fees 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. Or you can use the reverse-charge arrangement when you reverse-charge the VAT to the buyer.
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 in one of the previous 5 years, you can send in a tax return adjustment (suppletie). In some cases you may settle your VAT restitution with payroll taxes you owe.
Please note: From 2022 you need to use Mijn Belastingdienst Zakelijk (the tax administration’s business portal, in Dutch), administration software, or a tax representative to file your VAT returns. If you want to use the business portal as a legal person, you need eHerkenning to log in. If, as a resident business, you cannot register with the Chamber of Commerce, you may still make use of the old portal (in Dutch).
VAT regarding outsourcing of work (reverse charging of VAT)
If you outsource work to a subcontractor, they normally have to pay the VAT to the Dutch Tax and Customs Administration (Belastingdienst). However, in some cases and in some sectors (construction, shipbuilding and cleaning sector) a VAT reverse-charge mechanism (verleggingsregeling) applies: this means you will have to include this VAT in your VAT return and you pay it instead of the subcontractor. If this reverse-charge mechanism applies to goods or services you supplied, you have to indicate this on your invoice.
Exemption from paying VAT for small business owners
Do you run a small business in the Netherlands? You may be exempted from paying VAT (turnover tax). With a turnover of less than €20,000 per year you can apply for the Small Businesses Scheme (kleineondernemersregeling, KOR). If you make use of this scheme, you do not charge VAT to your customers. You also do not file VAT returns, although there are some exceptions. If you join this scheme, this also means you cannot deduct VAT on business costs and investments.
VAT on goods and services to another country
Do you supply goods or services to a customer in another country? And does this concern goods and services that are not exempt from VAT? You must take into account that different rules apply, depending on the country in which your customer is established and on your turnover. You need to calculate either the Dutch VAT or the VAT of the other country. And you must file a VAT return in either the Netherlands or abroad. In some cases the VAT is reverse-charged to your client. It is advisable to use the Dutch-language tools How to deal with VAT on goods to another country and How to deal with VAT on services to another country to find out what you need to do.