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If you are an ex-pat starting your own business, it is probable that you will have lots of questions about the tax implications.

Questions will certainly arise, such as what is the right kind of legal entity to, a BV or is the “eenmanszaak” or sole trader/one-person business) a more suitable option?

You may well be advised to seek the help of a tax accountant or administrator in The Netherlands who will be able to answer all of these questions by giving you all the required information and advice on all matters which are important for your particular situation.

Keeping your books in order can be a very time-consuming business. Besides the bookkeeping, you want to be sure that all the tax declarations are done in time without thinking about it and without any issues.

You need the help of an expert who is able to look at your present situation, but also your future business plans and experiences. Contact Intercompany Solutions for the tailored tax advice that will give your fledgling start-up the best possible chance. With our help, you will always be up-to-date with your administration and tax matters in The Netherlands.

Let us take care of all the tax matters, so you can focus on your business in The Netherlands.

So, if I inherit a company in the Netherlands, do I have to pay inheritance tax or gift tax?
Yes, if you inherit or receive a business as a gift, you pay tax. How much? That depends on the value of the company. And sometimes you get an exemption.

If you continue the business, you can get an exemption from inheritance tax or gift tax
For example, if you take over the family business from your parents. This scheme is called the business succession scheme(1). You then pay less or no tax.

When can you make use of the business succession scheme?

How do you make use of this business succession scheme?
You have to file a gift tax or inheritance tax return and state that you want the exemption. We strongly advise you to engage an advisor if you are taking over a company. They can also help you determine the value of the company for inheritance or gift tax.

Are you the heir of an entrepreneur? After the death of the entrepreneur, you will have to deal with various tax issues, such as inheritance tax and substantial interest. An executor can provide you with good services in settling the inheritance.

Substantial interest in Dutch law
Owning at least 5 percent of the shares of a BV company or NV is called a substantial interest. In the event of death, the substantial interest passes on to you as heir. You do not have to file a tax return for the profit from a substantial interest. This only applies if the shares become part of your private assets, and you are liable for tax in the Netherlands.

If after you acquire the shares you decide to emigrate or place the shares in another (holding) company, the tax authorities will consider this a taxable event.

Inheritance tax
As soon as the estate has been settled, you as heir must settle on the inheritance tax (a tax on the value of the shares or depository receipts thereof). With a high business value, this often means a large amount per heir. This can endanger the survival of the business if the inheritance tax is paid from it. The law provides for deferment of payment under certain conditions. Then this tax must be paid in 10 equal annual installments.

Continuing the business
Do you want to continue the inherited business? If you take advantage of the business succession facility, you do not have to pay tax on much of the value of the business assets. View more information about the business succession facility.

Sources:
https://ondernemersplein.kvk.nl/belastingzaken-bij-erven-van-een-onderneming/

https://www.bedrijfsopvolging.nl/kennisbank/bedrijfsopvolgingsregeling-borbof/

https://www.erfwijzer.nl/onderneming.html

If you would like to set up a business in the Netherlands, you will need to take into account that this means you will also have to pay several business taxes. The exact amount and type(s) of tax(es) you will need to pay depend on the legal entity you choose, your business activities and several other formalities. To give you a head start, we have compiled basic information about Dutch business taxes and the implications this has for your possible business venture in the Netherlands. For personal advice on this matter, you can always contact Intercompany Solutions.

When is someone considered an entrepreneur for Dutch income tax purposes?

Not everyone who wants to be a Dutch entrepreneur actually is an entrepreneur for income tax purposes. If your activities take place in the economic sphere, and if you can expect a profit, you have a source of income and you may be an entrepreneur for income tax purposes. If your activities take place within the hobby or family sphere, you are not an entrepreneur for income tax purposes.

In order to qualify for income tax, there are 3 sources of income:

The source of your income depends on a number of factors. The law and case law set certain requirements that entrepreneurs must meet. After you have registered your company, we will assess whether you meet these requirements on the basis of your circumstances. The Dutch Tax authorities pay attention to several factors, which we have outlined below.

How independent is your company?

A business generally implies a certain measure of independence, as you don’t work for someone else but yourself. This means you should be the one that determines general management, daily activities and the goal of your business. If others determine how you should organize your company and how you carry out your activities, there is no solid basis for independence and thus; there is usually no independent company.

Are you making a profit? If so, how much?

Generally, the main goal of any business is generating profit, unless you want to establish a Dutch business in the non-profit or charity sector. If you only manage to make a very small profit or suffer structural losses that outweigh the profit, it is unlikely that you will make a real profit. In that case your activities won’t be marked as a business.

Do you own any capital?

Since the introduction of the Flex-BV, you don’t have to deposit an obligatory amount of capital anymore to start a Dutch business. Nonetheless, capital is necessary for many types of companies in several industries. You might have to invest in machines, advertising, hiring employees and insurance, just to name a few examples. Sufficient capital to start a business and running it for some time indicates that you might have a business as per Dutch law.

Who will be your clients?

The best thing for any business is a stable client base. The more clients you have, the more you will be able to reduce payments and certain continuity risks. With a full client database you also don’t depend on just a few clients anymore, increasing your independence as a business owner and thus, making it more viable for your business to survive.

How much time will you put into your work?

The amount of time someone spends on business activities is also a deciding factor. If you spend a lot of time on an activity without yielding returns, you usually don't own a business on paper. This essentially means that you must spend enough time on your work to make it profitable. If this is the case, your business can be seen as valid. Also keep in mind that you may be eligible for certain types of entrepreneurial deduction. For some of these entrepreneurial deductions you must meet the Dutch “urencriterium”, which is loosely translated as hours criterion or the reduced hours criterion.

“Urencriterium” or hours criterion conditions

Someone usually meets the hours criterion if you meet the following 2 conditions:

How do you publicize your company?

You depend on clients for your company’s existence. In order to be an entrepreneur, you must make yourself sufficiently known, for example through advertising, an internet site, a sign or your own stationery. Your company needs to be distinguishable from other brands and competitors, next to being uniquely tailored to your goals and ambitions. The more people know about your company, the higher the chances of success.

Are you liable for your company's debts?

If you are liable for the debts of your company, then you may be an entrepreneur. This is a tricky subject, though, as some Dutch legal entities profit from a division between personal debt and corporate debt. If you are the owner of a Dutch BV, for example, you will not be personally liable for any corporate debts you make. This doesn’t mean you don’t have to pay those debts though; any debts you make with your company need to be paid in full.

Can you be affected by an 'entrepreneurial risk'?

An entrepreneurial risk involves certain factors that can be troublesome and unexpected with any business. Is there a chance that your clients will not pay? Do you use your good name for the performance of your work? Are you dependent on the demand for and supply of your products and services? If you run 'entrepreneurial risk', this generally means you probably have a business.

When are e-commerce activities considered being (part of) a business?

A lot of people are currently interested in setting up an e-commerce business, due to the flexibility and freedom of movement this option provides. The Netherlands is especially a stable and reliable country to set up an e-commerce business, since the country provides a very competitive and financially profitable market. Do you have an internet site which you regularly use to advertise on the internet for business purposes? Or do you earn money with your internet site, such as by selling goods or services online, or with activities as an affiliate? If the answer to these questions is 'yes', then you are probably an entrepreneur. But whether this is really the case depends on several factors. For example, there are differences between being an entrepreneur for income tax and being an entrepreneur for VAT.

When are you not considered as an online entrepreneur?

If you have an internet page or a website, this doesn’t automatically make you an e-commerce entrepreneur. Do you offer goods or services for free? Or only in the hobby or family atmosphere? Then you are not an entrepreneur according to Dutch law. This is due to the fact that you do not have to pay VAT, and, you also do not have to state anything in your income tax return.

E-commerce entrepreneur for Dutch income tax

Do you sell goods or services online? And can you realistically expect a profit from these goods and/or services? Then this is seen as income and you may be an entrepreneur for income tax purposes. Do you want to register your company in the Netherlands as an online entrepreneur? Then Intercompany Solutions can assess for you whether you meet the requirements for entrepreneurship on the basis of your circumstances. Often, entrepreneurship can only be assessed after the end of a business year for income tax purposes.

Not an entrepreneur, but receiving income?

Do you have income from your internet activities that cannot be considered a hobby? And do you lack any basis of paid employment, but you cannot be considered an entrepreneur either? For Dutch income tax purposes, this is qualified as 'results from other activities'. Your profit is calculated in the same way as with entrepreneurs. But you are not entitled to certain schemes for entrepreneurs, such as the self-employed deduction or the investment deduction. In such a case it would be wise to consider establishing a formal company and possibly benefit from deductions and premiums.

E-commerce entrepreneur for Dutch BTW (VAT)

If you are not an entrepreneur for income tax purposes, you can still be an entrepreneur for VAT purposes. This is mainly the case, when you carry out activities independently and earn income from these activities. In order to find out whether you are an entrepreneur for VAT, we can assess certain facts for you and help you find the best way to do business.

Business taxes in the Netherlands

Once you are officially considered to be an entrepreneur or company owner according to Dutch law, you will need to pay an assortment of various business taxes. Meaning you cannot escape the tax authorities, but this is generally the case in any other country. Not everyone pays the same type and/or amount of taxes. As a Dutch entrepreneur you are required to file a quarterly and yearly tax return, pay tax and sometimes you get something back as well. But what kinds of taxes will you face?

Dutch BTW or sales tax (VAT)

In the Netherlands you pay a certain amount of VAT over services and goods, so as a company owner you will have to charge your customers tax too. This is called Dutch BTW, which is the same as VAT. The abbreviation VAT means 'Value Added Tax'. It concerns the tax you pay on sales made. You charge VAT on your invoices. And vice versa; if you pay invoices, they also state  the amount of VAT that you have to pay. The standard rate for VAT is 21%. In some cases special rates apply, these are 6% and 0%. Exemptions may also apply. You pay the VAT that you owe to the tax authorities per month, quarter or year. The Dutch Tax Authorities will let you know exactly how often you have to file a return. In most cases, entrepreneurs file a quarterly VAT return.

Dutch corporate tax

Dutch corporate income tax is a tax that is levied on the profits of companies, which are mostly qualified as a B.V. or N.V.. These companies and organizations must file an annual corporate tax return. Natural persons such as sole proprietorships pay tax on the profits through income tax. This is different for companies. Public companies, private companies and sometimes also foundations and associations pay corporate tax. In some cases, exemption from corporate tax is possible. Think, for example, of an association or foundation that mainly obtains its income through the efforts of volunteers or where the pursuit of profit is of additional importance.

Dutch dividend tax

If your company is a N.V. or B.V. and makes a profit, you can distribute part of that profit to the shareholders. This is usually done in the form of dividend. In that case, you pay dividend tax to the Dutch Tax Authorities. Does your company pay dividends to shareholders? In that case, you must withhold 15% dividend tax on the dividend you pay out. You must declare and pay within one month of the day on which the dividend is made available. In a number of cases you may be eligible for a (partial) exemption or refund of dividend tax.

Dutch income tax

You pay Dutch income tax on your taxable income if you have a sole proprietorship or partnership under firm. This is your income, minus all operating costs settled with any deductible items and tax arrangements. You must declare this to the Dutch Tax Authorities before the 1st of May every year. You only have taxable income if you make a profit with your business. This taxable income is the basis for your income tax. With your tax return, you can deduct deductible items and tax arrangements from your profit. This reduces the profit and therefore you pay less income tax. Examples of these deductible items and tax schemes are: the entrepreneur's deduction (consisting of the self-employed deduction and any starters deduction), general tax credit, investment deduction, SME profit exemptions and employed person's tax credit.

Dutch wage tax and national insurance contributions

If you employ staff, you inevitably need to pay your employees a salary. You need to deduct payroll tax from those salaries. These payroll taxes consist of the withholding of payroll tax and the payment of national insurance contributions. National insurance policies are legally required social insurance policies, that insure your employees against the financial consequences of old age, death, special medical expenses or having children.

The benefits of outsourcing accounting activities

Any entrepreneur establishing a business in the Netherlands can choose to their own administration, and therefore also their tax return. In such cases, it is desirable that you are well informed of any fiscal, financial and economic changes. The (partial) outsourcing of your administration and periodical declarations may initially seem expensive. But experience has shown, that an administration office or accountant actually earns you money.

When starting a business, you can include various scenarios in your business plan that include expectations of costs, including those of taxes. If you write a business plan, you can look at different financial scenarios together with the expert and see what influence the taxes have on the liquidity within your company. Intercompany Solutions can assist you during every step of this process; from the registration of your company to accountancy services. Please feel free to contact us for professional advice or a clear quote.

Read further: Company Formation Netherlands

The Netherlands is known worldwide as a very stable country economically, with a healthy fiscal and political climate. A few mentionable reasons that have led to this image are the fairly modest tax rates when compared to neighboring countries. Furthermore, clear and efficient administrative processes and the innovative use of IT and technology in order to facilitate tax compliance also contributed to this end. Compared to the rest or the European Union (EU), the Netherlands has a very competitive corporate income tax rate, which is 25% for yearly profits exceeding 245,000 euros and 15% for profits below that amount.

This year (2021) the corporate tax rates will be further reduced to and 15% instead of 16,5%. The tax system in the Netherlands has many attractive features and benefits, which especially attracts foreign companies and investors. Nonetheless, this doesn’t mean that nothing dubious ever happens. The country has experienced some difficulties in the area of tax avoidance, both by national as well as international companies, which is mainly due to the beneficial taxation system.

The Netherlands has a competitive fiscal climate

The Netherlands is a major hub for foreign multinationals, investors and entrepreneurs. This didn’t happen without a reason; the Dutch tax regulations and ruling practice have been around for more than 30 years and thus, provide international company owners with proper clarity when they decide to branch out to the Netherlands. The stable government also attracts many multinationals due to the stability it provides. The Dutch Tax Authorities are considered to be both cooperative and accessible, which makes foreign business owners feel safe and secure. Unfortunately, like with all good things, there are also investors and companies that use the profitable system to avoid certain financial obligations.

Fraud is still prevalent in all layers of society

Some people are not familiar with the extraordinarily large amount that is invested in the Netherlands by foreign companies and investors. During 2017, for example, the total amount of foreign investment totaled 4,3 trillion euros. The shocking fact is though, that the majority of this money wasn’t invested in the Dutch economy at all, only 688 billion euros of the original 4,3 trillion. That is only 16% of all total foreign investments. The other 84% went into subsidiaries or so-called shell companies, which are basically only set up to avoid paying taxes elsewhere.

Looking at these enormous amounts, it becomes clear immediately that this is not done by small players to hide some illegal profits from taxation. Only the largest multinationals and richest individuals in the global economy can pull such vast amounts off. This includes Dutch companies like Royal Dutch Shell, but also many foreign multinationals such as IBM and Google. These companies have established branch offices, headquarters or other operations in the Netherlands so the payable amount of tax in their country of origin is reduced. Some well known brands and companies are technically Dutch, as they established their headquarters in the country for the sole purpose of tax avoidance.

In order to visualize this, here is an example. The Netherlands is a very small country with a relatively small number of inhabitants, compared to the rest of the world. And yet, in 2016 16% of all foreign profits claimed by US companies were accountable to the Netherlands. This would seem as if the Dutch order a huge amount of goods and/or services from the US, but reality is a bit more shady. The companies in essence parked the money in their Dutch subsidiaries in order to avoid taxation, or they moved the money via so-called letterbox entities, which transfer the profits to other suitable tax havens. This way, they can funnel it to locations with a 0% corporate tax rate and avoid taxation altogether. It’s a clever trick that has been going on for quite some time, but the government is finally doing something about it.

The EU and the Dutch government are both taking action

The Dutch State Secretary of Finance has proposed to put forward a new tax policy agenda, which the government has agreed to adopt in order to put an end to such practices. The first priority of this agenda is thus tackling the evasion and avoidance of taxes. The other priorities are the reduction of the tax burden in the labor sector, the promotion of a competitive Dutch tax climate, making the tax system green and also more workable. This agenda is aimed towards a better and more resilient tax system, in which loopholes such as the current tax evasion are not possible to construct anymore. The Secretary aims for a simpler, more comprehensible, more workable and also fairer tax system.

A withholding tax to counter tax avoidance

During this year (2021) a new system of withholding taxes will be introduced, that focuses on interest and royalty flows to jurisdictions and countries with low or 0% tax rates. Suspicion of abusive tax arrangements is also included in this system. This is to prevent foreign investors and company owners from using the Netherlands as a funnel to other tax havens. Unfortunately, due to the evasion and avoidance of taxes this way the country has been in a somewhat negative spotlight recently. The Secretary wants to improve the situation by tacking tax evasion and avoidance head-on, in order to make a swift end to this negative image.

EU directives on tax avoidance

The Netherlands is not the only EU country that has been taking measures to eliminate tax fraud, as the EU adopted Directive 2016/1164 already during 2016. This directive lays down multiple rules against tax evasion and avoidance practices, which inevitably negatively affect the internal market. The rules are also accompanies by several measures to tackle tax avoidance. These measures are focused on interest deductibility, exit taxation, anti-abuse measures and Controlled Foreign Companies.

The Netherlands has chosen to implement both the first and the second EU anti-tax avoidance directives (ATAD1 and ATAD2), although the Dutch will implement even stricter standards than the standards required in the EU directives. Some examples include the absence of so-called grandfathering rules applying to existing loans, the lowering of the threshold from 3 to 1 million euros and the exclusion of the group exemption in the earnings stripping rule. Next to that, banks and insurance companies will be confronted with a minimum capital rule in order to ensure a more equal situation concerning debt and equity throughout all sectors. This will lead to a healthier economy and more stable companies.

The importance of transparency

One of the main factors that contribute to a healthy and viable tax system is transparency. This is particularly true when the need arises to tackle difficult problems such as tax evasion and avoidance. For example; fines that can be attributed to culpable negligence shall be made public, which in turn will also push accountants and tax advisors to execute their tasks with more diligence and honesty. If you want to establish a company or branch office in the Netherlands, we advise to choose a stable partner that knows all the necessary rules and regulations. Intercompany Solutions can assist you with the entire registration process, furthermore we can also help you along the way with accountancy services. You can contact us anytime for more information and friendly advice.

If you are a foreign company with a Dutch branch office or subsidiary, then you also fall under the Dutch VAT regulations. The Dutch word for VAT is BTW, which is the turnover tax you charge your clients. All Dutch companies have unique VAT identification numbers. These changed for all sole proprietorships on January 1, 2020, but this doesn’t affect any other Dutch legal entities, such as BVs. If you do business in the Netherlands, you need to pay and charge VAT for nearly all services and goods, apart from a strict list of exemptions. Doing business within the European Union (EU) is generally free of VAT if your company is based in one of the EU Member States, we will outline this in detail later.

VAT is the abbreviation for 'value added tax', but for entrepreneurs, it is better known as sales tax. Like all other taxes, it is an additional source of revenue for the government of the country your business is based in and is imposed as a levy on any product or service. This ranges from a hairbrush you buy or a screwdriver in the hardware store, to having a website built and content written for the same website. In essence, this indeed means that you pay taxes not only on the money you earn, but also on what you spend.

In this article, we will provide you with a basic overview of Dutch VAT, such as the current rates, which services and goods fall under these rates, and an extensive list of exemptions. Please also keep in mind that, from July 1, 2021, new VAT rules for e-commerce will apply. So, if you are thinking about starting a Dutch e-commerce company, you can find more information about these new rules here. You can also find some interesting information about starting an e-commerce business in the Netherlands in this article.

The history of Dutch VAT

Before we start explaining how the Dutch VAT is structured and what this means concretely in terms of taxation, let’s explore the history of VAT a little bit. Paying taxes has been around for centuries, it’s definitely not a new invention. In the time of the Roman Empire, there were already four different kinds of taxes: a land tax, a cattle tax, a tax related to customs, and a tax on the profits of any profession. In these days, the latter would equal (corporate) income tax. Later, namely in the 17th and 18th centuries, taxes mainly concerned basic necessities such as firewood, soap, salt, grain, meat, peat, coal and wool. Due to the fact that no one could live without these products, the government was always assured of an income. The government used that money to protect the land and residents, maintain public order and regulate traffic, water management and trade. An interesting detail: during these times, everyone paid the same rate regardless of their income. In 1806, a system of general taxes was introduced under Alexander Gogel, who was Minister of Finance during the Batavian-French period. The significance of the system lay mainly in achieving the unity of Dutch taxation1.

The first form of tax on income was introduced in 1914. The purpose of introducing income tax was to tax according to one’s actual ability to pay, which was a new approach to taxation because, as we just mentioned, previous ways of taxing didn’t take into account how much someone earned. The history of the implementation of VAT (or sales tax) in the Netherlands dates back to 1969, when the system was introduced. The low rate at that time was 4%, and the high or normal rate was 12%. The VAT rates have changed several times over the years, with a clear upward trend. This trend can be observed worldwide. From then on, VAT in the Netherlands was levied according to the value-added tax system. Many European countries enacted VAT in the 1960s and 1970s. Other countries followed in the 1980s and thereafter. The current VAT system was introduced at the proposal of the European Union (EU). The EU wanted to introduce a European tax, and this became VAT, modeled after the French system of levying sales tax, the TVA.

The role and size of the government have only increased since then. That is why each government ‘needs’ more and more money to be able to carry out all its tasks. New tax types, such as sales tax (VAT since 1969) and corporate tax, were therefore introduced. In 1964, a payroll tax was also introduced. On October 1, 2012, the normal VAT rate in the Netherlands was increased from 19% to 21%.

Historical VAT rates in the Netherlands

Below you will find an overview of the historical VAT percentages in the Netherlands, from the moment of the introduction of the current value added tax on the basis of the European VAT guidelines in the Turnover Tax Act 1969. As you can see, the rates have steadily risen throughout the years.

Effective date                                  Low                                     High

January 1, 1969                             4%                                      12%

January 1, 1971                             4%                                      14%

January 1, 1973                             4%                                      16%

October 1, 1976                             4%                                      18%

January 1, 1984                             5%                                      19%

October 1, 1986                             6%                                      19%

January 1, 1989                             6%                                      18.5%

October 1, 1992                             6%                                      17.5%

January 1, 2001                             6%                                      19%

October 1, 2012                             6%                                      21%

January 1, 2019                             9%                                      21%

Why pay VAT as an entrepreneur?

Paying taxes is necessary because it funds the government, everyone knows this. As a natural person, you essentially pay VAT on everything you buy. But what is the difference when you are an entrepreneur? You charge VAT on top of your fees or prices to your customers. They will then pay the total amount mentioned on your invoice. You, as an entrepreneur, will have to pay that money back to the Dutch tax authorities. If you also paid VAT, then you can reclaim some of the VAT as well. But why do we pay taxes this way? Why don't the tax authorities collect it directly from your customer? Why do entrepreneurs first charge each other taxes and then have to hand these over to the tax authorities? The purpose of VAT is that the ultimate user of a product or service pays this tax. But before a product reaches the final user, there are many steps in between, you can see it as a (supply) chain. Where does VAT go? It is not always completely clear where the production chain ends. That is why everyone in that chain must pay this tax. This way, the Dutch tax authorities seem to keep control of it. Everyone simply pays sales tax, and then the tax authorities determine who is or is not entitled to a refund. This also has a practical advantage: as a VAT-registered entrepreneur, you do not have to worry about whether your customer is liable for VAT or not.

When you own a business in the Netherlands, you also have to pay VAT on your purchases. Think of office supplies, necessary stock items, a car, and various forms of equipment. You can therefore offset this input tax with the VAT that you have charged your customer. In short, VAT can actually be financially neutral for entrepreneurs, or even balance out positively if you have more costs than income. As an entrepreneur, you are a kind of conduit for the tax authorities. So the sales tax does not come from your 'own money'. It has no influence on your turnover or profit. You simply pass the VAT on to the tax authorities. Keep in mind, that this does not apply to self-employed persons who carry out work that is exempt from VAT, since they do not have to charge sales tax on their service. These are, for example, journalists, artists, funeral directors or companies that do something with sports, culture or education. We will add a comprehensive list of VAT exemptions later in this article, so you can become acquainted with all professions that charge 0% VAT. Self-employed persons in this group cannot therefore reclaim the VAT they have paid from the tax authorities. In their case, sales tax does affect profits as an additional cost. You can also be partially liable for VAT. In addition to your VAT-free work, you might also provide services or goods that have VAT added. You can then reclaim the sales tax proportionately. If you are liable for VAT on half of your activities, you can reclaim half of the tax you paid. So make sure you fall under this category as an entrepreneur to know how to handle your VAT return correctly.

The current Dutch VAT rates

In the Netherlands, there are three distinguishable VAT rates: 0%, 9%, and 21%. The highest rate of 21% is the standard rate for all products and services, which is why this is considered the general VAT rate. The 9% rate applies to certain products and services. Amongst others, these are food products, books, artistic works and certain medicines. You can find an extensive list below. The 0% VAT rate applies when your Dutch-based company does business with companies based in other EU countries and in the case of special exemptions, which we will also describe below2.

The three VAT ratesexplained in detail

21% VAT rate

The 21% tariff is generally the most commonly used tariff in the Netherlands. Most services and products fall under this category, unless there are reasons for exemptions. Another reason why a product or service might have a different tariff, is the reverse-charge mechanism when doing business with companies and people in other EU Member States. If none of these exemptions apply and your product or service does not fall under the 9% or 0% category, then you always pay or charge 21% VAT.

9% VAT rate

The 9% tariff is also known as the low VAT tariff. This tariff applies to a wide variety of goods and services that are used daily or on a regular basis, such as:

The 9% rate also applies to a number of services closely linked to goods covered by the 9% rate:

0% VAT rate

The 0% tariff applies to all company owners and entrepreneurs, who do business with foreign countries. It doesn’t matter whether the company owner is a foreigner or not; if the business is executed from an established branch office in the Netherlands, all its activities fall under the Dutch tax regulations. The 0% tariff mostly applies to the supply and shipping of goods from the Netherlands to other EU countries, but can also apply to certain services that are provided from the Netherlands. These can also be services that are related to cross-border transactions, for example, transportation of goods internationally or work on goods that will be exported. This tariff also applies to all international transport of travelers and passengers. An interesting note: if you apply the 0% VAT tariff, you still have the right to deduct VAT on your quarterly statement to the Dutch Tax Authorities.

Exemption from VAT

Next to the three distinct VAT rates, there are also certain businesses and business activities, as well as sectors, that are completely exempt from VAT. This means, in simple terms, that the customers of such companies and organizations do not have to pay any VAT. These businesses, activities and sectors are as follows:

This comprehensive list can also be found on the website of the Dutch Tax Authorities.

More special exemptions

Next to the standard exemptions mentioned above, there are also a number of extra exemptions that lead to a 0% VAT rate. The most relevant are all mentioned below. If you have a business idea in any of these sectors, chances are high you don’t have to charge VAT to your customers and clients.

The healthcare sector

All medical professions and consultations that solely focus on healthcare are exempt from VAT. This exemption applies to all professions that can be categorized under the Health Care Professions Act (BIG). So this exemption applies to professions such as paramedics, therapists, doctors, surgeons, general practitioners, care homes, orthodontists and dentists. However, please keep in mind that the exemption only applies if the services offered are within the area of expertise of the professional. So a dentist cannot use the 0% rate if he or she, for example, offers psychology sessions without the proper academic degree and professional experience. This rule also stretches to third parties, as temping agencies that provide health care professionals have to charge the regular rate of 21%. The latter also applies to personnel registered in the BIG register.

Digital and online services

If you own a company that supplies digital services such as telecommunications, broadcasting, or online e-services, then the place from which you supply these determines which VAT rate applies and where it needs to be paid:

Tax-free shopping

You might be familiar with this situation at various national and international airports: tax-free shopping. This situation applies when you sell goods to non-EU residents; in that case, you do not charge VAT to your customers. In order to prove this on future declarations, you can use a copy of the sales invoice stating your customer’s credentials. A check with the customer’s name or a copy of his or her passport is also considered proof, in the case of the latter, you will need to cover the citizen service number and the customer’s photo due to privacy legislation.

Fund-raising activities

Some fund-raising activities are also exempt from VAT. This is the case if the activities are initiated for:

Keep in mind that there is a limit to the exact amount you can raise for such organizations. If you exceed this limit, other VAT rates may apply.

Vocational education

If you consider working in the Netherlands as an independent teacher or for a private school, there might be a possibility your services are exempt from VAT. Your services need to be within the field of vocational training, and you also need to be registered in the Central Register of Short Professional Training Courses (Centraal Register Kort Beroepsonderwijs, CRKBO).

Sports clubs

Most services that are offered by non-profit sports clubs and organizations are exempt from VAT. The services need to be closely related to physical exercise and/or the actual practice of sports. You can look on the website of the Dutch Tax Authorities for an extensive list of tax (VAT) exemptions.

Some important changes since 2021

Please note, that there were some changes in July 2021 that concern the current VAT rules. If you are an e-commerce entrepreneur, and you supply goods from outside the EU to consumers within the EU, then these rules apply to you. There used to be a VAT exemption for all imports of shipments with a maximum value of 22 euros. This exemption has expired as of July 2021. However, if it concerns shipments with a value of up to €150, for which an exemption from customs duties applies under Article 23 or 25 of Regulation (EU) 1186/2009, then you must file an import declaration in the country of destination and pay the VAT there. Unless you opt for the "import scheme," do you opt for the import scheme? Then you register in the country where you are located or in the country where your representative is located. If you use the Import Regulation, you will receive an 'import regulation number'. You use this number when you submit a declaration to customs with DECO. You can read more about this in our article about changes to Dutch import regulations for e-commerce entrepreneurs.3

Submitting your periodic VAT return

If you are a Dutch entrepreneur, then you will have to file a quarterly VAT return for your sales tax. We always advise keeping this money separate somewhere and not spending it, as it is not actually yours to spend. It’s best to have a separate account and also keep track of the money via accounting software, or by hiring a third party to whom you can outsource such administrative tasks. Many entrepreneurs hire an accountant or bookkeeper simply because they don’t have enough knowledge, time, and/or expertise to take care of all financial and tax matters on their own. Also, keep an eye on the deadlines. The tax authorities charge a fine for each tax return filed late. Even if you don't get anything back or have to pay anything, make sure you send the necessary data on time to avoid problems in the future.

Intercompany Solutions can help you with company registration and all related financial matters

If you plan to establish a company in the Netherlands, you will have to go through a lot of paperwork and separate actions in order to realize this. You will need to fulfill all information requirements for our team in order to prepare for the formation of your business. For the formation of a Dutch BV, which is the most common type in the Netherlands, the formation procedure will be as follows:

Step 1

Step 2

After we have prepared the initial documentation for the formation of the business, all involved shareholders will need to visit the Dutch notary public to sign the formation documents. Alternatively, it is possible for us to prepare the formation documents to be signed in your home country and send the original signed documents to our corporate address in Rotterdam, by authorizing us to go in your stead.

Step 3

Our firm will then follow the official company formation procedure in the Netherlands and file the company in the Dutch company register. You then receive your Dutch Chamber of Commerce registration number as well as your VAT number. If you need an EORI number, please let us know, as we can arrange that for you too. We can also assist with extra services, such as a bank account application, as we have several solutions regarding the application process with certain Dutch banks remotely. Our experienced team can help you during the entire process; we can handle the procedure in only a few business days. We are also always available to assist you with any financial questions or matters, such as periodic and annual tax returns, how to keep a solid administration, and secretarial support. Please contact us for more in-depth information about our services.

Sources:

[1] https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/zakelijk/btw/btw_berekenen_aan_uw_klanten/btw_berekenen/btw_tarief/btw_tarief

[2] https://www.belastingdienst.nl/wps/wcm/connect/nl/douane_voor_bedrijven/content/e-commerce-kijk-wat-er-voor-de-btw-verandert-bij-uw-douanezaken

[3] https://www.rijksoverheid.nl/onderwerpen/inkomstenbelasting/voorkomen-dubbele-belasting

[4] https://www.belastingdienst.nl/wps/wcm/connect/nl/btw/btw

If you want your Dutch e-commerce company to do business in the entire European Union, you will have to deal with different VAT rules than those that apply if you only deliver to customers in the Netherlands. A number of basic rules apply to VAT in the EU. This includes certain threshold amounts for the levying of VAT if you sell to consumers in other Member States as well as VAT registration abroad. From July 1, 2021, however, new VAT rules for e-commerce will apply. This article will explain the most important VAT rules for Dutch companies in e-commerce, such as web shops and platforms that supply to foreign consumers in the EU. This also includes dropshipping.

Basic rules that apply in the entire EU

VAT is levied in all countries within the EU. EU countries themselves determine the level of VAT rates on products. Which country is allowed to charge VAT is determined by:

For sales and deliveries where goods are shipped from the Netherlands to consumers in other EU countries, Dutch VAT is payable as a basis as long as you stay below a certain threshold amount. This means that you will charge your foreign customer Dutch VAT until your turnover in the relevant country reaches the applicable threshold amount.

Threshold amounts for foreign sales

Within the EU, threshold amounts have been agreed upon for the levying of VAT on sales to consumers in other Member States. This is also known as distance sales. If your turnover in another EU country exceeds the threshold amount within a year, you calculate the VAT rate for that country. You then pay the VAT there and submit a VAT return. The distance selling threshold varies by country. The Dutch Tax Authorities have more in-depth information about this.

The threshold amounts do not apply to the supply of excise goods, such as alcoholic drinks and cigarettes. The threshold amounts also don’t apply to new or almost new means of transport such as cars. Deliveries of these types of goods do not count towards the threshold amounts. With every delivery, regardless of the amount, you calculate the VAT of the country where these goods are shipped.

If you sell goods that fall under the so-called margin scheme, these deliveries do not count towards the threshold amounts. If you apply the margin scheme, you owe Dutch VAT to the Dutch Tax Authorities on the profit margin of the goods. You do not charge VAT to the customer and do not state this on the invoice, since the VAT is already included in your sales price.

Information about VAT registration

You can only calculate foreign VAT with a VAT registration in the relevant country. You will receive a VAT number from the foreign tax authorities and submit a local VAT return. Furthermore, you can also hire a tax advisor who takes care of your foreign VAT registration and declaration, ICS is always happy to assist with such tasks. Ensure timely VAT registration in the country where you owe VAT to avoid hefty fines. Even if you first paid VAT in the Netherlands, the foreign tax authorities are still entitled to the VAT owed there. You still need to pay these abroad before you reclaim the Dutch VAT.

When to use a foreign VAT rate?

When you deliver to customers in another EU country who do not submit a VAT return, such as consumers, you can always use the foreign VAT rate and file a local return. This is possible even if you stay below the threshold amount. You must submit a written request for this to the Dutch Tax Authorities.

1st of July 2021: new EU VAT directive for e-commerce

From 1 July 2021, the new EU VAT directive for e-commerce will apply. The new rules apply when you achieve an annual turnover of 10,000 euros or more with your Dutch web shop or e-commerce business from sales to consumers in EU countries outside the Netherlands. If your turnover in other EU countries remains below 10,000 euros per year, you may continue to charge Dutch VAT. With the new VAT Directive, the European Commission wants to modernize and simplify VAT taxation, create a "level playing field" for entrepreneurs within and outside the EU and combat VAT fraud on small-value parcels.

Changes that might impact your company

Implementation of the new bill has direct consequences for your business operations due to the following 3 changes:

1.      No more separate threshold amounts

As of 1 July 2021, the threshold amounts for intra-EU distance sales per individual EU country will be cancelled. There will be 1 joint threshold amount of 10,000 euros. This threshold applies to all intra-EU distance sales of goods, together with sales of digital services to consumers in the EU. If your total amount of foreign sales in EU countries remains below 10,000 euros per year, as a Dutch e-commerce business you may continue to charge Dutch VAT. Just keep in mind that the transport of the shipment needs to be initiated in the Netherlands and that you need to own a branch office in an EU country.

From the moment you exceed the threshold amount of 10,000 euros, you charge the VAT rate of the EU country where your customer is located. You can arrange your foreign VAT return in 2 ways. Either you submit a local VAT return for each individual EU country to which you have sold and shipped goods, or you register your company for the 'Union Regulation' within the new one-stop-shop system of the Dutch Tax Authorities.

2.      VAT exemption for imports up to 22 euros expires

When goods are imported into the EU, there exists a VAT exemption for import VAT on shipments with a value up to and including 22 euros. This exemption will expire on 1 July 2021. The EU aims to create a "level playing field" for all sellers within and outside the EU. From 1 July 2021, import VAT will be due on the import of goods into the EU, regardless of the value of the shipment. Shipments with a value up to and including 150 euros will remain exempt from import duties though.

When you sell products from outside the EU to customers who do not submit a VAT return, you must declare the VAT from 1 July 2021 in the EU country where the goods arrive. For example, when you deliver products from Taiwan through your web shop directly to consumers in Belgium, You must pay Belgian VAT on this delivery.

3.      Platforms pay VAT when taking on an active role

An entrepreneur is responsible for the VAT payment on products that he or she sells to consumers via a platform. In the new VAT rules, the platforms are responsible for this VAT payment if the platform plays an "active role". But an active role is more than just bringing together supply and demand digitally. For example: facilitating orders and payments for products. The platform supports the purchase and delivery of products to private customers and is therefore due VAT in the country where the customer lives.

Furthermore, the following applies:

If the value of the shipment is above 150 euros, the platform is also liable for VAT when it facilitates the delivery to a consumer by a non-EU-based entrepreneur and the goods go from one EU Member State to a consumer in another Member State. If you own a platform and have goods shipped directly by professional sellers from outside the EU to customers in other EU countries, you need to investigate together with your tax advisor whether you will be faced with a greater VAT obligation and liability after the introduction of the new rules.

The new ‘One stop shop’-system

Following the changes of the law, the current MOSS scheme for suppliers of digital services in the EU will be merged into the new One Stop Shop (OSS) system. As a user of the current MOSS scheme, you declare your VAT from 1 July 2021 via the new one-stop shop. You can also declare distance sales via the new portal. If you exceed the threshold amount of 10,000 euros with both deliveries, digital services and goods, you can submit your declaration via this portal. As an entrepreneur you can declare the VAT payable in other EU countries via the OSS portal of the Dutch Tax Authorities. You do this by registering for the 'Union Regulation'. You do not need a VAT registration in other EU countries.

Service providers will soon also be allowed to declare VAT via the 'Union Regulation' in the OSS portal. When you opt for the new system, you will first need to de-register his other EU VAT numbers. If you need these other VAT numbers for other sales tax-related matters, for example for the deduction of input tax, you can also choose to keep the number. You will not be able to reclaim VAT paid in these countries via the one-stop shop though. To do this, you must submit a separate request for a refund to the Dutch tax authorities. In this case a local declaration is more convenient, which will also save you extra administrative actions.

The before mentioned companies and platforms that sell products from outside the EU to consumers in EU countries and have them delivered directly can use the OSS portal. This is possible with the "Import regulation" within the portal. The Dutch Tax Authorities arranges that the VAT declared via the OSS portal is sent to the correct EU country. When you store goods for your web shop in a warehouse in another EU country, you need a VAT number from that EU country. The goods delivered by you from the foreign warehouse are taxed with local VAT. They are delivered from that country, and you cannot declare your VAT via the Dutch OSS portal. You file a VAT return in the relevant EU country.

Special information regarding the small business regulation (KOR)

The small business regulation (KOR) is a specific exemption from VAT. You can use the KOR if you are located in the Netherlands and have no more than € 20,000 in turnover during 1 calendar year. The KOR is for natural persons (sole proprietorships), combinations of natural persons (for example a general partnership) and for legal entities (for example foundations, associations and private limited companies). If you, however, exceed the threshold of 10,000 euros in turnover in EU member states other than the Netherlands with your web shop, you become liable for VAT in the relevant EU member states. At that point the VAT rules of the EU member state of your consumer apply and thus, the Dutch KOR is then no longer applicable.

You must declare this turnover in the Netherlands. You can register for the Union Regulation within the one-stop shop, or you can register locally for VAT and file a local tax return. For example, if you also purchase in the relevant country with local VAT, this might prove to be cheaper. You can then deduct the VAT paid directly in your tax return. The turnover on which you file a declaration locally in another EU country does not count towards the KOR. You can continue to apply the KOR until you reach a turnover of 20,000 euros in the Netherlands. If your annual foreign turnover in the EU remains below 10,000 euros and this turnover, together with your Dutch turnover, does not exceed 20,000 euros, you may continue to work under the KOR. In that case, you do not calculate VAT and also do not declare VAT.

Customs legislation for e-commerce shipments

In addition to the VAT rules, customs legislation for e-commerce shipments will also change from 1 July 2021. An electronic import declaration is required for all shipments with a value up to 150 euros. In addition, new regulations will be added for these small shipments that are currently being further elaborated. Suppliers who directly deliver goods from countries outside the EU can, under certain conditions, use the 'Import regulation' within the OSS portal. With this Import Regulation, a supplier submits a VAT return in 1 EU country. This arrangement only applies to shipments with a value of up to 150 euros. Instead of import VAT, the supplier directly pays the VAT applicable in the country of destination via the one-stop shop.

Customs agents, transport and postal companies will have a different regulation if companies do not use the Import regulation. In this case, customs at the EU border will estimate the value of the shipment. Companies collect the VAT due directly from the consumer. They report the import VAT owed on a monthly basis and pay this via an electronic declaration. This also only applies to shipments with a value up to 150 euros. Read more on E-commerce in The Netherlands.

Implementation of these new rules

The One Stop Shop, or OSS, consists of 3 voluntary regulations:

  1. The "Union Regulation" for EU-based companies with at least 1 branch office or subsidiary in an EU country. This regulation applies to intra-EU distance sales and services.
  2. The "non-Union Regulation" for companies established outside the EU without an establishment within the EU. This regulation applies to services.
  3. The "Import regulation" for distance sales of non-EU goods with a maximum value of 150 euros.

The Dutch Tax Authorities will support the one stop shop system from 1 July 2021. The organization has set up an "emergency track" for this purpose. This means that you can use the above regulations, subject to some restrictions:

Manual processing can result in incomplete exchange of information with other EU countries. The tax authorities indicate that any delays caused by the system have no consequences for the VAT payment to the other EU country. For example, a delay will not result in a fine from the other EU country. A declaration via your software package, also called system-to-system, is not possible within the emergency track.

Using the one-stop shop

Your declaration and registration for the aforementioned regulations is done via My Tax and Customs Administration, tab EU VAT one-stop shop. For your registration and declaration you need ‘eRecognition’ (eHerkenning). If you have a sole proprietorship, you can use DigiD. You can register for the Union Regulation and Import Scheme from 1 April 2021.

If you do not yet have eHerkenning for your company, apply for it in time. When you purchase an eH3 login tool for your registration for the new OSS portal, you may be able to claim the "Compensation scheme eHerkenning Belastingdienst". If you are entitled to the scheme, the compensation amounts to 24.20 euros including VAT per year.

Make sure you are prepared for the coming changes

The new threshold amount of 10,000 euros is much lower than the current threshold amounts per country. As a result, you are more likely to owe VAT in another EU country than right now. The new entry rules have consequences for your business operations. You will need to map out in which countries your customers live, how much turnover you achieve in which EU country and which VAT rate applies. EU countries have different VAT rates. This has consequences for your product price per country. Make adjustments to your ERP system for correct administration and invoicing. Also check how you display the different product prices in your web shop. When visiting your web shop, your customer wants to see a correct price including VAT. Consult with your accountant or supplier of the system what options you have for this. Consider whether you use one of the voluntary schemes or opt for a local VAT registration in the individual EU countries. Make sure you have your registration and systems in order before 1 July 2021.

Intercompany Solutions can assist you with any needed changes

If you need to make new calculations, or find out if these changes will affect your company, we can aid you in retrieving the necessary information and personal advice for your Dutch company. We can also assist you with company accounting and VAT registration, the entire financial aspect of your company or branch office in the Netherlands and any other specific questions you might have.

Sources:
1. https://ec.europa.eu/taxation_customs/business/vat/modernising-vat-cross-border-ecommerce_en
2. https://home.kpmg/us/en/home/insights/2021/04/tnf-eu-vat-rules-affecting-e-commerce-sellers-marketplaces.html
3. https://www.bakertilly.nl/

The first thing you need to do is to register your company with the Trade Register via the Chamber of Commerce. Your company information will be automatically transferred to the tax authorities.

When registering the BV with the Chamber of Commerce you will receive an RSIN number. This number is also on the extract of the Chamber of Commerce. This RSIN number becomes the fiscal number of the BV. The VAT number is derived from this number, namely with the addition NL and B01 at the end. However, this number must be activated, and we can perform this process for you.

To assess whether the BV is an entrepreneur for VAT, the following matters are taken into account:

A taxable person for VAT is any person who, in the pursuit of economic activity, provides, regularly and independently, for-profit or not, a supply of goods or services, wherever the economic activity is carried on.

The definition includes 4 essential elements:

Everyone:
Natural person, legal person or associations insofar as they carry out economic activities

Economic activity:
All activities of the producer, trader or service provider are envisaged (except for exempt transactions).

Regularly exercised activity:
To be a taxable person, the transactions listed in the Code must be performed by him/her regularly. Only through succession do actions become an activity. The regular occurrence of the actions in the form of an activity is not clearly defined.
Determining whether an action is part of a regular activity or of an accidental nature is assessed on the basis of the facts.

Independent:
The activity must be carried out on an independent basis and not in employment. There should be no bond of subordination to another person.

The criteria the tax office uses for VAT assessment can include:

If the BV meets the tax inspector assessment, there is a tax liability for VAT, and the Tax and Customs Administration will issue a VAT number. This international VAT number is crucial for international transactions with other legal entities within the EU since a valid number leads to an invoice without VAT. (a so-called intra-community transaction). It is also important to always check the validity of the VAT number of your counterparty since the normal VAT rate applies if the number is invalid. The VAT number can be checked using the European Vies VAT number validation website.

Where to use the VAT number?

Foreign citizens and businesses, as well as local citizens who apply for a VAT number with the Dutch authorities, must display this number on every invoice they provide. They must also file VAT reports with the local tax office. All invoices are required to include certain information about the VAT, such as:

The VAT number of the client;
The VAT ID number of the seller;
Information about the items/services sold;
The amount of VAT (net);
The VAT rate;
The amount of VAT charged;
The total amount including VAT.

In conclusion

The whole process of applying for a VAT number can be completed within 5 working days. Our accounting and VAT specialists file- and consult hundreds of such VAT requests per year. Our specialists ensure the best possible service to represent your company with the tax authorities.

You should also be aware that if your company is dissolved, you must also contact the tax authorities as the VAT number must be deleted and the company will be de-registered.

Over the last few years, the government of the Netherlands has been keen to be seen to be taking decisive action against tax evasion. 1n July 2019, for example, the government announced its plan to close loopholes in which companies avoid tax by taking advantage of the differences in tax systems of countries, the so-called hybrid mismatches. State Secretary Menno Snel sent a bill to that effect to the House of Representatives. This bill was one of the measures taken by this cabinet to combat tax avoidance.

The ATAD2 (Anti Tax Avoidance Directive) bill is designed to stop internationally operating companies from taking advantage of the differences between the corporate tax systems of countries. These so-called hybrid mismatches ensure, for example, that payment is deductible, but is not taxed anywhere, or that one payment is deductible several times.

The most famous example of a hybrid mismatch is the CV / BV structure, also known as the "piggy bank at sea". Companies from the United States have been notoriously able to postpone taxation of their global profits for a long time with this structure. But thanks to the measures from ATAD2, the Cabinet is ending the fiscal attractiveness of this structure.

A follow-up to previous measures

ATAD2 is a logical continuation of ATAD1. ATAD1 entered into force on January 1, 2019, and addressed other forms of tax avoidance. This has led, among other things, to the introduction of the so-called earnings stripping measure, a general interest deduction limitation in corporate tax. The bill was presented to the House of Representatives in July 2019 contained further measures against hybrid mismatches.

The majority of the measures in the bill to implement ATAD2 came into force on 1 January 2020. Other European countries have also introduced ATAD2, which was welcomed by the government. Hybrid mismatches are most effective when done on an international basis.

Background to ATAD2

The introduction of ATAD2 was one of the measures taken by this government to combat tax avoidance. In addition, the method for issuing rulings with an international character was tightened from 1 July. The cabinet is also preparing legislation to levy a withholding tax on interest and royalties by 2021, with a very targeted approach to a cash flow of 22 billion euros to low-tax countries.

And more tax avoidance measures are planned. In 2024, for example, the Dutch government plans to bring in a new withholding tax on dividend flows that will apply to low tax jurisdictions. This will herald another important stage in the fight to stop tax avoidance. The new tax is planned in addition to the withholding tax that will be imposed on interest and royalties from 2021.

The new tax will allow the Netherlands to tax dividend payments to countries that levy hardly any taxes and will also help reduce the use of the Netherlands as a conduit country. The tax will be levied on countries with a corporate tax rate of less than 9% and will also apply to countries currently blacklisted by the EU blacklist. These are not half-hearted measures by any means.

Any questions? Contact our business consultants for more information.

Are you a business owner who is based in a country other than the Netherlands? Do you supply services or goods to the Netherlands? If so, you might be classed as a foreign entrepreneur in terms of VAT. You may need to file a turnover tax return in the Netherlands and you might also need to pay VAT in the Netherlands. ICS can provide you with more information about the latest VAT regulations in the Netherlands as well as calculating VAT, filing VAT returns, paying VAT, and how to deduct or claim a VAT refund.

VAT registration for foreign business owners

In certain cases, a foreign entrepreneur who has to cope with Dutch VAT can opt to register for VAT with the Dutch tax authorities.

This is a possibility, for example, if a businessman does not want to offer bank guarantees, as is a requirement for General Tax Representation. Another benefit is the fact that the latter is more straightforward to arrange than a General Tax Representation permit.

There are certain disadvantages for a non-Dutch national to register for Dutch VAT. This is because foreign entrepreneurs are not entitled to a permit under Article 23 (VAT reverse charge) because it is only for people who live in the Netherlands as an entrepreneur or are established there. Since the VAT cannot be transferred it is a given that it must always be paid.

VAT on foreign receipts

First of all: all expenses must be made for your business can be deducted. If so: you can deduct the costs.

For VAT: on hotels outside the NL, VAT of the country of the hotel will be applicable.
So for example you stay in a hotel in Germany, German VAT will be applicable. You can’t deduct this German VAT in your Dutch VAT declaration. There are possibilities to ask this VAT back with the German tax authorities, but a threshold applies and it is a time-consuming process.

This is therefore only interesting when it concerns large amounts. The costs of the hotel can of course be deducted from the Dutch profit. For airline tickets no VAT is applicable. You can deduct the costs of the profit (if it is a trip for business).

It would good to discuss with your suppliers when it is possible that suppliers do not charge you VAT. If you have an active VAT number in the Netherlands, they can verify that with the EU Vies register. And see that they are allowed to invoice you at 0% reversed charge. For other countries outside the EU, other rules apply.

How to apply for a Dutch VAT number

When foreign entrepreneurs want to apply for a Dutch VAT number, they only have to submit a few documents, but they must first complete an application form from the tax authorities. As soon as the Dutch VAT number is supplied, a foreign entrepreneur is legally able to trade in any country within the European Union.

Adequate VAT administration is needed for this and this is where a company such as ICS can provide valuable assistance. An international company can opt to have this administration undertaken by an administration office based in the Netherlands. The Tax and Customs Administration carries out strict checks, especially when reclaiming VAT so it is extremely important to ensure that the correct paperwork is always in order. If the administration is outsourced to an accounting office, this office is not responsible for the activities with which the foreign company is involved in the Netherlands.

Do you want assistance with applying for a VAT Registration for foreign entrepreneurs? The experienced VAT specialists at ICS will help you on your way.

Do you market new innovative products based on your own R&D? Then you may be eligible for the Innovation Box. The Innovation Box reduces corporate tax for profits from innovative activities. As of 2018, an effective tax rate of 7% applies instead of the maximum rate of 25%. The tax authorities implement the Innovation Box.
If you want to use the Innovation Box, you will need to submit an R&D statement and in some cases also a patent. This scheme is only of interest to companies subject to corporate tax, such as private limited companies. Contact ICS for more information about the potential benefits of the Innovation Box.

The small-scale investment allowance (Kleinschaligheidsinvesteringsaftrek or KIA)

Do you invest in business assets? Then you can deduct an amount from the profit with an investment deduction. You are then eligible for a small-scale investment allowance (KIA). The amount of KIA depends on the amount invested.

Who is eligible?
You may be eligible if your company is established in the Netherlands and you are liable to pay income tax or corporate income tax;
You invest in company resources for your company.

In 1 year you invest a certain amount in new or 2nd-hand business assets. In the table of the Tax Authorities, you will find the percentages for the investment deduction.

Divestment addition
Do you sell or donate your assets within 5 years of your investment? And is the total value more than € 2,300? If so, you must repay part of the deduction via the divestment addition.

How can you apply?
You can apply the small-scale investment deduction to your income tax or corporate tax return.

Energy investment allowance (EIA)

If you invest in certain energy-saving assets and sustainable energy, you may deduct part of the investment costs from your taxable profit via the EIA scheme. This means you pay less income tax or corporate tax. Contact the tax specialists at ICS to find out if you are eligible to do this.

Environmental investments

It is sometimes possible to benefit when you make investments to limit damage to the environment. Investments that are on the Environmental List provide an additional deductible item on the Environmental Investment Allowance (MIA) or you can write off accelerated (Random depreciation of environmental investments (Vamil)). This reduces your income tax or corporate tax. The MIA / Vamil scheme applies to, among other things, environmental measures in industry, agriculture and transport.

How to apply for Dutch EORI number

In the Netherlands, economic operators are identified by Customs by their EORI number. In other words, those who have to deal with Customs from a business perspective, for example by preparing a customs export or import declaration for goods, must be known to customs. This also applies to companies that have a Customs export or import declaration drawn up by, for example, a Customs agent, freight forwarder or logistics service provider. This declaration is made with an EORI number.

When do you need an EORI number?

An EORI number is required if you actually have contact with Customs. This is the case when a Customs declaration is independently filed, it is filed on your behalf, or you apply for a permit. This number (compiled or applied for by Customs) is activated when it is included in the Customs declaration. An EORI number is therefore essential for import- and export firms based in The Netherlands.

How can I look up an EORI number?
You can check another person's EORI number online via this link. This handy tool allows you to look up the EORI number of another person and check whether it is valid and actually exists.
Check EORI number

The Eori number code
The main component of this number already has a company in-house, namely the RSIN or BSN.
The EORI number consists of the letters NL + the RSIN (or BSN) and includes a 9-digit number in addition to the two letters NL. If the RSIN (or BSN) consists of less than 9 digits, this must be completed with zeros before the RSIN (or BSN) to the number of 9 digits (for example NL000123456). This whole forms the EORI number.

How can I apply for an EORI number?
Our tax specialists can assist you with requesting an EORI number for your firm. Our firms has completed dozens of successful EORI number applications for foreign entrepreneurs. Contact us for more information on requesting an EORI number.

EORI number at headquarters and branches
The EORI number is only linked to the head office (legal unit). The business units (branches) do not receive an EORI number. Branches use the EORI number of the head office. This also applies to branches from the other Member States.

EORI number at headquarters in another Member State
A company with a recognized permanent establishment that is not established in the Netherlands can obtain a Dutch EORI number. This should be evident from the fact that the Foreign Department of the Dutch Tax Authorities has assigned a tax number. It is then a self-contained entity.

EORI number at headquarters in a third country
A company established in a third country must have an EORI number if, for example, it wants to make a customs' declaration. The EORI number will also be issued in the Member State where it is intended to do this for the first time.

EORI number and representation
A company established in a third country without a recognized permanent establishment in the Netherlands can have a Customs declaration made in the Netherlands. This can be done by an authorized Customs agent or forwarder based on an Indirect Representation Authorization. The EORI number of this Customs agent or forwarder is mentioned in the declaration.

Considering to start an import or export company in the Netherlands?

Are you interested in opening an import or export company in the Netherlands? Or looking to learn more about the Dutch customs and goods shipment regulations?

The Netherlands is considered as a gateway to Europe, especially for trade and logistics. The Rotterdam Europoort (Gateway to Europe) harbour is one of the largest harbours in the world, and the biggest logistical harbor in Europe.

If you operate a business in the Netherlands, there is a strong chance that you will need to submit your annual financial accounts with the Dutch Chamber of Commerce (KVK). You must do so if you are responsible for:

A public limited company (NV);
A private limited company (BV);
A mutual insurance association;
A cooperative association;
A general or limited partnership (VOF or CV resp.) where all the managing directors are foreign nationals;
A foundation that is responsible for one or several companies with a certain amount of turnover.

What are the annual account publishing requirements?

The Dutch authorities take the publishing of annual accounts very seriously and it is essential to meet the deadline. Your annual accounts must be submitted to the Chamber of Commerce (KVK) within 8 working days after they have been formally adopted. If you have been able to adopt the annual accounts in time, it is possible to offer your provisional accounts. Your accountant or auditor will be able to advise you about the deadline as this varies according to the legal set-up of your company, but it will definitely be within a year from the start of the financial year. If you miss the deadline, you will probably have to pay a fine. There is also the chance that you may be held personally liable for company debt in the event of bankruptcy - even if your company is structured to prevent this occurrence.

The way in which you publish your annual accounts largely depends on the size category of your company - micro, small, medium or large. If your company is classed as small or micro you are advised to file your own accounts online which is a straightforward process. If you use an intermediary, they must use the Standard Business Reporting software (SBR) when submitting returns online.

These accounts are public records. If you are interested in viewing any businesses annual accounts, you can order them online via the Chamber of Commerce.

Foreign legal entities

Foreign legal entities are also obliged to submit their annual accounts in the Netherlands:

If they are from countries not part of the EU with a branch in the Netherlands if they are required to submit yearly accounts in the country of domicile.
Foreign legal entities that may be registered in their country of origin but do not have an active relationship with that country and solely operate in the Netherlands.

Circumstances when you do not need to file your annual accounts
There are several situations where you don't need to submit your annual accounts. This mainly applies to daughter companies (subsidiaries) and small private limited companies for the purposes of pensions or annuities. Nonetheless, you will be obliged to publish a declaration of consent or an accountant's report. In extraordinary circumstances, such as bankruptcy, theft or fire, you can ask for an exception to the obligation to file your annual accounts.

Contact our accounting and tax specialists for more information.

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