This post is also available in: Nederlands (Dutch)
Turnover tax, also called VAT, is a tax on goods and services. VAT relates to the amount that an end-user pays for a good or service when purchasing. VAT is a burden for (private) consumers and also on other final consumers, but is levied on the entrepreneurs whome deliver the goods or provide the services.
Because the turnover tax is levied according to the destination country principle, it means that if you are an entrepreneur and you supply goods to or provide services for Dutch end users, you are liable for collecting and remittance of VAT. However, it is possible that the reverse charge mechanism applies. In the event that a company client liable for VAT is located outside the Netherlands but inside the EU, the levy of VAT may be shifted to your client.
To this purpose a qualifying invoice is to be prepared by the supplier. If this invoice does not meet specific conditions, the reverse charge mechanism may not be applicable which will lead to damages for the supplier. We can supply you with a qualifying invoice template, please send us an email if you wish to receive such a template invoice.
Furthermore be sure to validate your client’s VAT ID number upfront before sending an invoice, such check can be done online via the so called VIES.
The general VAT rate is 21%, but this rate does not apply to all goods and services. On certain goods and services a reduced rate of 9% / 0% is levied or they are fully exempt from VAT (e.g. certain financial and medical services). Furthermore VAT is levied according to the so-called principle of value added tax with deduction of input tax. In principle, the taxpayer must:
- Make a declaration for turnover tax on his own initiative, and;
- Calculate the total compensation that the taxpayer has received for the delivery of a good or the provision of a service;
- On this total received amount, the taxpayer then deducts the tax charged or payable by him for the deliveries of goods made to him and services rendered to him;
- The excess will either be payable or receivable by the taxpayer or in some cases the outcome may be nil.