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06.12.2018

Netherlands: VAT topics budget 2019

Summary of the VAT relevant topics

Key Facts
  • The reduced VAT rate will be increased from 6% to 9%.
  • All small businesses, for both individual and legal persons, can be exempted from the Dutch turnover when it is less than EUR 20,000.
  • Cross-border turnover of e-commerce services to private individuals below EUR 10,000 is taxable in the country where the entrepreneur is established unless the entrepreneur opts to have the services taxed in the country of its customer.
  • More activities will be included in the Dutch VAT exemption for sport and sport-related activities as from January 1, 2019.
  • As from 2019, the Dutch Tax Authorities can redress the tax claim to the beneficiaries when they knew or should have known that the tax claim would be avoided by their actions.

On September 18, 2018, the Dutch Government announced the budget for 2019. Below we summarize the VAT relevant topics.

VAT

Reduced rate

As of January 1, 2019, the reduced VAT rate (for food, hotel stay, pharmaceutical products, books, etc.) will be increased from 6% to 9%. The old rate of 6% can be applied regarding advance payments for supplies invoiced in 2018 which will be carried out in 2019.

Small businesses

Currently, individual persons with small businesses can receive a reduction of the payable VAT when their annual payable VAT amount is less than EUR 1,883. As from January 1, 2020, the regulation will be applicable for all small businesses, so for both individual and legal persons (resident in the Netherlands or with a Dutch permanent establishment for VAT purposes). Instead of a reduction of the payable VAT, the Dutch turnover can be exempted when it is less than EUR 20,000. When an entrepreneur requests this exemption, it will be applicable for at least three years.

E-commerce

Council Directive 2017/2455 will be incorporated in the Dutch VAT legislation as from January 1, 2019. As a result of this, the so called Mini One-Stop Shop (MOSS) will include an annual threshold of EUR 10,000 regarding certain cross border e-commerce services to private individuals (electronic, telecommunication and broadcasting services). Cross-border turnover below this threshold is taxable in the country where the entrepreneur is established unless the entrepreneur opts to have the services taxed in the country of its customer.

Sports exemption

Due to the ECJ case Bridport and West Dorset Golf Club (C-495/12) and unsuccessful combat of tax avoidance structures by the Dutch Tax Authorities, more activities will be included in the Dutch VAT exemption for sport and sport-related activities as from January 1, 2019. As a result of the expanded exemption, more VAT entrepreneurs will not be able to reclaim input VAT on large investments. These entrepreneurs can apply for a subsidy from the Ministry of Health, Welfare and Sports.

Tax liability

Currently, taxpayers try to avoid tax collection by the Dutch Tax Authorities by, for example, liquidating the legal person that is liable to pay taxes (e.g., VAT). As from 2019, the Dutch Tax Authorities can redress the tax claim to the beneficiaries when they knew or should have known that the tax claim would be avoided by their actions (e.g., liquidation of the legal person).

Article published in WTS Global VAT Newsletter Q4/2018
Recent or expected changes in VAT and GST regulations and compliance duties in various EU and third countries
View publication
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