What is the VAT treatment for intercompany
VAT in the Netherlands
VAT is a broad-based consumption tax used by all EU countries including the Netherlands. As a consumption tax, the burden of payment is placed on the final consumer of the goods or services. While all EU countries charge VAT, each member state can decide what and at what tax rates. VAT in the Netherlands is considered an indirect tax as it is paid to the seller of the goods or services first. The seller then pays the tax to the tax authorities.
VAT rates in the Netherlands
The Netherlands has different VAT rates and a list of goods and services that are exempt from VAT. The main general Dutch VAT rate is 21% and has been that way since 2012. This rate applies to most goods and services.
There is a special 6% VAT rate that applies to a subsection of goods that are deemed necessary. The goods include food and beverages (but not alcohol), livestock for farming purposes, medical necessities (such as prescription drugs), most reading materials, and seeds for agriculture and horticulture. Materials purchased for home renovation are sometimes taxed at this rate, depending on the age of the home.
There are some services that are taxed at this lower 6% rate. These include hairdressing services, vacation homes, public performances that are considered artistic (plays and musical performances), and most transportation services.
A zero rate of VAT applies to goods that are not consumed in the Netherlands. If they are shipped and consumed outside the EU, no VAT is charged. If the goods are bought by a legal economic operator in another EU country, that company is responsible for collecting VAT on the final consumer in the country in which it exists. However, if the goods are sent to a final consumer in another EU country, you will have to charge VAT in the Netherlands.
VAT exemptions in the Netherlands
There is a list of services that are fully VAT exempt in the Netherlands. With the exemption, the state does not levy any taxes on them. These exemptions include medical services provided by a doctor or nurse, banking services, insurance advice and services, child care services, and educational services. Journalistic services are also exempt from VAT, but only if the service provided by the journalist is considered intellectual property and only the original ideas of that journalist are.
It can be difficult to determine what is and what is not VAT exempt. It is recommended that you always speak to a local advisor to determine your particular VAT rate.
VAT registration in the Netherlands
If your company sells goods and services for consumption in the Netherlands or the EU, it must register for VAT. Once registered, you will need to file annual sales tax returns and make regular payments to the tax authority that you have received. These VAT filings can now be made electronically. Payments can be made either monthly or quarterly. Some smaller businesses that charge very little sales tax may file an annual sales tax return and payment instead of paying on a regular basis throughout the year. You should seek advice from an advisor to determine if your VAT payments are low enough to qualify for a one-time annual payment.
Please contact our Dutch representatives for more information on VAT issues in the Netherlands. We advise you on tax exemptions and what you need to do to qualify for them. We can also assist you with filing annual tax returns and help you register your company in the Netherlands for VAT.
Read more about the Dutch tax system.
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