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The VAT in the Netherlands is an indirect tax established and charged on the value added at each stage of production and distribution of economic goods, regardless of their origin. Being a consumption tax, the tax burden is supported by the final consumer and the seller (or service provider) has the role to collect and transfer the VAT to the state budget.
VAT is a neutral and unique tax because it applies to all economic activities and it is independent of the extent of the economic circuit. The payment of VAT is split because it is calculated for each stage in the production and marketing processes.
The VAT rates in the Netherlands
The general VAT rate in the Netherlands is 21%, since October 2012, and it applies to services and sustainable products. The VAT rate applies to all goods and services which are not covered by the other smaller rates.
The Dutch VAT rate of 6% applies to a wide variety of goods and services, for example food products and beverages (excluding alcoholic beverages) and the ingredients used, livestock, medicinal products, books, newspapers and magazines, agricultural and horticultural seeds. Among others, the following services are also covered by the 6% rate: hairdressing, transport, art performers (an artistic achievement that the public directly or indirectly can listen or watch), vacation rentals. The renovation of homes that have been put into use can also benefit from a VAT rate of 6%.
If goods are exported and consumed abroad, these products do not fall under the Dutch taxation system. In these cases, the so-called zero rate is applied for the supply of products and services to entrepreneurs and legal entities in other EU countries. This means that the turnover tax will take place in the EU country where the goods will be sent. Please note that if you provide goods or services to individuals in other EU countries, you have to charge VAT.
Exemptions from VAT payment in the Netherlands
Exemptions from VAT in the Netherlands include the services provided by doctors, nurses, insurance advisory and journalists. Educational field is also exempted from VAT payment. Exemption means that the state does not charge any taxes on sales of products or services.
However, there are certain rulings in the VAT exemption, for example, the work of journalists and writers is exempted only when it comes to their own ideas, included in intellectual property in the Netherlands.
VAT registration in the Netherlands
All companies in the Netherlands that provide goods or services and qualify as VAT payers must register, regardless of their annual turnover. Businesses that are registered for VAT must submit annual VAT returns and make monthly or quarterly VAT payments to the local tax authority. Small companies that have an annual VAT tax due of less than 1,883 can make a single annual VAT return submission. This mandatory submission can be filed electronically.
Our experts can help you with guidance for the submission of the annual tax returns as well as with assistance for VAT registration in the Netherlands.
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