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Almost every entrepreneur in the Netherlands must calculate and add VAT (turnover tax, BTW) on the sales price of their products and services they provide, regardless of the legal structure of their company. Even a foundation or association can be liable for VAT. There are VAT various 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.
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. 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.
If you provide all of the details required by the Dutch Tax and Customs Administration when you register with the Dutch Commercial Register, they will provide you with a VAT number immediately. You must indicate your VAT number on all of your invoices.
Please note: As of 1 January 2020 there will be some changes in VAT numbers. Self-employed professionals will automatically receive a new VAT number and will then have 2 VAT numbers: a VAT identification number (btw-id) and a VAT tax number.
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. However, you may deduct the VAT you had to pay to your suppliers.
In some cases, entrepreneurs are not required to charge VAT to their customers. For example, if goods or services are exempt from VAT, such as childcare and the services of funeral directors, charging VAT is not necessary. Usually this also means deduction of paid VAT is not possible.
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 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 make the VAT payment: each month, each quarter or each year. Usually, you will file your 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 within 5 years before that year, you must 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
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 reverse charge mechanism: this means you will have to include this VAT in your return and eventually pay it. When applicable, you have to indicate this on your invoice.