Frequently asked questions on VAT

For VAT you are a business if you independently and regularly supply goods or services that you get paid for. That is separate from income tax: the hours criterion and the expected profit do not count here. So you can be a VAT business while your income counts as ‘income from other activities’ for income tax. The other way round is also possible.

The Dutch KOR is an exemption for businesses with a turnover of no more than € 20,000 a year. You then charge no VAT to your customers, but you do not get back the VAT on your purchases either. If you make big investments, that works against you. If you go over the limit during the year, the scheme stops applying from the supply that takes you over it. If you leave the scheme yourself, you cannot join again that year or the year after. For sales to private customers in other EU countries there is a separate EU scheme.

The standard rate is 21%. A fixed list of goods and services has 9%, for example food, books and passenger transport. The zero rate applies to exports outside the EU and to supplies to a business in another EU country with a valid VAT number, among others. There are also exemptions, which are different from the zero rate: with an exemption you do not get back the VAT on your purchases. If you are unsure about a rate, check it up front. A wrong rate can carry on for years.

That depends on your return period: monthly, quarterly or yearly. The return and the payment must both be in within one month after that period ends. If you file late, the penalty is € 82. If it happens more often, it can go up to € 165. If you still file within seven days after the deadline, you usually get no penalty. Paying late has its own penalty.

The supplier charges no VAT, and the customer declares the VAT themselves. Within the Netherlands this happens with subcontracting in construction, demolition and cleaning work and the trade in scrap and mobile phones, among others. It also happens across borders: with a service to a business in another EU country, the VAT shifts to that business. The customer declares the reverse-charged VAT and deducts it again in the same return. On balance that is zero, but it does have to be in the return.

Only the VAT on purchases you use for taxed turnover, and only for the business part. Some costs are excluded: food and drink in restaurants and bars, and staff benefits and business gifts above a limit per person per year. The company car has its own rule. If you also use the car privately and your records do not show how much, you pay 2.7% of the list price at the end of the year. From the fifth year after you started using the car, that is 1.5%.

You must report a mistake within five calendar years. If the correction is € 1,000 or less, in your favour or not, you may include it in your next return. If it is more, you file a separate correction online. If you have to pay extra, you get an assessment and pay interest. If you file the correction within three months after the end of the year, you do not pay that interest. Reporting it yourself almost always works out better than waiting for the tax authorities to find it.

Among other things: your name and address and those of your customer, your VAT number, a sequential invoice number, the invoice date, the date of the supply or service, a description, the amount per rate, the rate and the VAT amount. If you use a special scheme, it must be on it, for example ‘VAT reverse charged’ or a reference to the margin scheme. This matters: if your invoice is not right, your customer cannot deduct their VAT, and that comes back to you.