Frequently asked questions on VAT

For VAT you are a taxable person if you independently and with some regularity supply goods or services for consideration. That is separate from whether you are an entrepreneur for income tax: the hours criterion and the profit expectation play no part here. You can therefore be a taxable person for VAT while your income counts as income from other activities for income tax. The reverse happens too.

The Dutch KOR is an exemption for businesses with a turnover of no more than € 20,000 per calendar year. You charge no VAT to your customers, but you cannot deduct the VAT on your purchases either, which works out badly if you invest. If you cross the limit during the year, the scheme stops applying from the supply that takes you over it. If you leave the scheme voluntarily, you cannot rejoin 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 closed list of goods and services carries 9%, for instance food, books and passenger transport. The zero rate applies to exports outside the EU and to intra-Community supplies to a customer with a valid VAT identification number. Exemptions are something else again: with an exemption you have no right to deduct input VAT. A rate you are unsure about is worth settling up front. A wrong rate runs on for years.

That depends on your period: monthly, quarterly or annually. Filing and payment must both happen within one month of the end of the period. Filing late is a filing default: the penalty is € 82, rising to € 165 for persistent default. If you file within seven days of the deadline a penalty is usually withheld. Paying late carries a separate penalty.

The supplier charges no VAT and the customer accounts for it. Within the Netherlands that applies to, among others, subcontracting in construction, demolition and cleaning work, and trade in scrap and mobile phones. It also applies cross-border: on a service to a business in another EU country the VAT shifts to them. The customer declares the reverse-charged VAT and deducts it in the same return. Nil on balance, but it has to be there.

Only VAT attributable to your taxable supplies, and only to the extent the purchase is for business use. Some items are excluded: food and drink consumed in hospitality venues, and staff benefits and business gifts above a limit per person per year. The company car has its own rule: if you also use it privately and the private use does not appear from your records, you account for 2.7% of the list price at the end of the year. From the fifth year after it was taken into use, that becomes 1.5%.

You are required to report an error within five calendar years. If the correction is € 1,000 or less, positive or negative, you may process it in your next return. If it is larger, you file a separate correction return, digitally. A positive correction leads to an assessment and interest, but if you file the correction within three months of the end of the year no interest is due. 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 identification number, a sequential invoice number, the invoice date, the date of supply, a description, the consideration per rate, the rate and the VAT amount. If a special scheme applies, it must be stated, for instance 'VAT reverse charged' or a reference to the margin scheme. This is not a formality: on an invoice that fails the requirements your customer can lose their deduction, and that lands back with you.