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Understanding VAT Netherlands Rates and Compliance in 2023

Understanding VAT Netherlands Rates and Compliance in 2023

Find out everything you need to know about Dutch VAT compliance, including VAT rates, VAT registration, and more.

In this comprehensive guide, we’ll walk you through all aspects of Dutch VAT, including VAT rates, how to register for a VAT number, and the various other VAT compliance requirements in the Netherlands. By the end, you’ll have a solid grasp of VAT Netherlands and be well-equipped to handle your obligations with confidence.

Short summary

  • The Netherlands abides by the EU VAT Directive, with different rates of taxation depending on the goods or services being sold.
  • Businesses must obtain a Dutch VAT number if they exceed certain thresholds or if they meet specific criteria, such as storing goods in the Netherlands.
  • Anyone doing business in the Netherlands must also adhere to invoicing standards, filing frequencies and deadlines, as well as tax point rules.

Understanding the Dutch VAT system

Dutch VAT system

Value Added Tax in the Netherlands adheres to the European Union (EU) VAT Directive, with standard, reduced, and zero rates applied to a variety of goods and services. A VAT tax number is required for businesses exceeding certain thresholds or storing goods in the country.

But what exactly are these rates, and how do they fit within the EU VAT system?

Dutch VAT rates

The Netherlands VAT rate is as follows:

  • Standard rate: 21%
  • Reduced rate: 9% (applies to certain goods and services such as food, beverages, agricultural products, and medications)
  • 0% rate: applies to specific services, including cross-border transactions.

These rates align with the broader EU VAT Directive, which aims to harmonize VAT law across member states.

European Union VAT Directive

The European Union VAT Directive stipulates that VAT rates must be within a certain range to maintain cohesion across the EU VAT area. The minimum rate of VAT that the Netherlands can set in accordance with the EU VAT Directive is 15%.

This flexibility allows each member state to set its own VAT rates, while still adhering to the broader EU framework.

VAT registration with the Dutch tax authorities

Businesses that exceed certain thresholds or store goods in the Netherlands must register for a VAT number. This includes foreign companies with a Dutch branch, which are also obligated to have a VAT identification number.

So what does the registration process entail, and how can foreign entrepreneurs navigate it?

Foreign businesses

On July 1, 2021, the country-specific distance selling thresholds were harmonized across the EU, with an EU-wide threshold of €10,000 EUR now applying to all EU Member States. Therefore, a business must register for a Dutch VAT number if they exceed the €10,000 threshold or meet certain criteria (storing goods in the Netherlands, for example).

This ensures that all businesses operating in the Netherlands, whether local or foreign, adhere to the country’s VAT regulations and contribute to the Dutch tax system.

The registration process is straightforward and can be completed online. Businesses must provide their contact information.

Online registration

To register for a Dutch VAT number, businesses must complete an online form, print and sign it, and submit it to the relevant Dutch tax authorities. The Dutch VAT registration form can be found on their website. You can also find the address of the Dutch tax office there.

If your company is not resident in any EU Member State, a fiscal representative will need to be appointed to act on behalf of your business in the Netherlands.

It's essential to provide accurate information during the registration process to avoid errors that could result in penalties.

What does a Dutch VAT number look like?

The Dutch VAT Number is referred to as the 'BTW-identificatienummer” or 'BTW-nummer' for short. This number consists of the country code 'NL' followed by nine digits, the letter B, and two final digits. For example: NL000099898B57.

Dutch VAT compliance requirements

To ensure compliance with Dutch VAT regulations, businesses must adhere to specific invoicing standards, filing frequency, deadlines, and tax point rules. Quarterly VAT returns are typically filed, and it’s essential to pay VAT in a timely manner. Let’s delve deeper into these compliance requirements.

Invoicing standards

Invoices in the Netherlands must contain specific details, such as:

  • Invoice number
  • Date
  • Supplier and customer information
  • Vat identification number of supplier
  • Description of goods or services provided

Both electronic and paper invoicing are permitted, with e-invoicing being obligatory for business-to-government (B2G) transactions.

Invoices should be retained for a period of seven years, or ten years for invoices pertaining to immovable property.

Filing frequency and deadlines

VAT returns in the Netherlands are usually filed on a quarterly basis, with exceptions for monthly or yearly filing based on request or VAT amount payable. The VAT return form must be returned two months after the end of the relevant period.

By adhering to these filing frequencies and deadlines, businesses can avoid penalties and ensure compliance with Dutch VAT regulations.

Tax point rules

Tax point rules in the Netherlands determine when VAT is due and payable to the tax authorities, which is 10 days after the conclusion of the VAT reporting period (monthly or quarterly). For most goods, the reporting period for the tax point is the time of delivery or passage of title, while for services, it is the completion of the service.

Understanding these rules is crucial for businesses to manage their VAT obligations effectively.

Verifying and using VAT numbers

Once a business has registered for a VAT number, it is essential to verify its validity and display it on invoices and websites. This not only ensures compliance with Dutch VAT regulations, but also instills trust in customers and suppliers.

So, how can businesses verify and use VAT numbers?

Verification via VIES tool

The VIES (VAT Information Exchange System) tool provided by the European Commission can be used to verify the validity of a Dutch VAT number. By entering the VAT number into the VIES tool, businesses can ensure that they are dealing with a legitimate company and avoid potential errors or fraudulent transactions.

This is an important step for Dutch private individuals to take when dealing with companies in the Netherlands, as knowing the country code can facilitate smoother communication and transactions.

Displaying VAT numbers

Invoices must display the VAT identification number of the business, and websites must also exhibit the VAT ID number. EU businesses must include the VAT identification number of any Dutch clients on their invoices and summary statements. This is a legal requirement that must be complied with.

By displaying VAT numbers prominently, businesses can demonstrate their compliance with Dutch VAT regulations and foster trust with their customers and suppliers.

Deregistering a VAT number

Sometimes, businesses may need to deregister their VAT number, such as when they cease operations or no longer meet the VAT registration threshold. In the Netherlands, this process involves:

  • Dissolving the legal entity
  • Reporting the dissolution to the Chamber of Commerce (KVK)
  • Settling all debts and dividing the remaining assets
  • Deregistering the legal entity at the KVK

The process of deregistering a VAT number in the Netherlands is relatively straightforward.

Automatic deregistration

When a company is removed from the Dutch Business Register, automatic deregistration occurs, and the VAT number is terminated. The KVK will inform the Dutch Tax and Customs Administration of the termination, and a written confirmation will be provided.

This process ensures that businesses are no longer obligated to comply with Dutch VAT regulations once they have ceased operations or no longer meet the registration requirements.

Navigating VAT exemptions and special cases

Dutch Tax Exemptions

In some cases, businesses may be required to deal with VAT exemptions or special cases, such as the reverse charge mechanism or the IOSS (Import One-Stop Shop) scheme for low-value goods. Understanding these exemptions and special cases can help businesses manage their VAT obligations more efficiently and effectively.

Reverse charge mechanism

The reverse charge mechanism is a VAT principle that transfers the obligation for paying VAT from the supplier to the customer. Under this arrangement, the customer is responsible for accounting for the VAT on their VAT return instead of the supplier charging the VAT on the invoice.

This system simplifies cross-border transactions and reduces the administrative burden on businesses.

IOSS and low-value goods

The IOSS scheme, which came into effect on July 1, 2021, eliminates VAT exemption on low-value goods not exceeding €150 imported to the EU. This change ensures that all imported goods are taxed in the destination country, leveling the playing field for EU businesses and simplifying the VAT process for consumers who purchase goods from non-EU sellers.

The IOSS scheme is a major shift in the way VAT is collected on imported goods.

Conclusion

Navigating the complexities of Dutch VAT can be a daunting task, but with the right resources and understanding, businesses can effectively manage their VAT obligations. From registering for a VAT number and adhering to compliance requirements to navigating exemptions and special cases, this guide has provided a comprehensive overview of the Dutch VAT system. Armed with this knowledge, businesses can confidently tackle their VAT responsibilities and ensure compliance with Dutch VAT regulations.

Need help with your Dutch VAT compliance?

Researching Dutch VAT laws can help you better understand VAT compliance requirements, though the process can be complex and time-consuming. Taxually offers specialized tax software that takes care of the day-to-day VAT needs of your business, so you can get on with more important things.

Book a free call with one of our VAT experts to find bespoke solutions for your business, optimize your VAT costs, and reach millions of new potential customers.

Frequently Asked Questions

What is the VAT rate in the Netherlands in 2023?

The standard VAT rate in the Netherlands for 2023 is 21%. Additionally, there are two special rates: a zero rate and a reduced rate of 9%.

Do you charge VAT from the UK to the Netherlands?

When purchasing items online from the UK, you must always pay VAT. If you’re in the UK and the place of supply of your service is in an EU country, you do not pay UK VAT.

When importing products from the UK to the Netherlands, VAT is charged over the value of the products, including any import duties.

What is the 9 VAT rate in the Netherlands?

The 9% VAT rate in the Netherlands is known as the low tariff and applies to food and drink, medicines, newspapers, magazines, and other similar products and services.

How does VAT tax work in the Netherlands?

In the Netherlands, VAT is payable on the supply of goods and services, as well as the importation of goods. The standard rate is 21%, with a reduced rate of 9% for some goods and services.

Consumers pay this tax to the trader, who then remits it to the Tax and Customs Administration.

How can I register for a Dutch VAT number?

To register for a Dutch VAT number, you must complete an online form, print it, sign it, and submit it to the Dutch tax office. The form can be found on the Dutch tax office website.

How long before I receive my Dutch VAT ID number?

For a Dutch resident company, it normally takes no longer than two weeks to receive your VAT number. if your business is not-Netherlands based, it can take up to eight weeks.

December 13, 2023
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