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Understanding Value-Added Tax (VAT) in the Netherlands
Value Added Tax (VAT) in the Netherlands is a consumption tax that is imposed on the value added to goods and services. The standard rate of VAT in the Netherlands is 21%, with reduced rates of 9% and 0% applying to certain goods and services such as food, medicine, and transportation. Businesses in the Netherlands are required to register for VAT if their turnover exceeds a certain threshold, currently set at €20,000 per year. Once registered, businesses must charge VAT on their sales, and they can also claim back VAT on their business expenses. VAT returns must be filed on a quarterly or annual basis, depending on the size of the business. The Netherlands also has specific rules for cross-border transactions and distance selling, which can impact the VAT treatment for businesses involved in international trade. Overall, VAT is an important source of revenue for the Dutch government, contributing to the funding of public services and social welfare programs.
Company Formation in the Netherlands
Company Formation in the Netherlands is now at your fingertips, and just 2 clicks away. Are you ready to take the plunge and start your own business in the Netherlands? Congratulations, you've made a wise choice! The Dutch business environment is well-known for its entrepreneurial spirit, favorable tax climate, and well-established infrastructure. Whether you're launching a startup or expanding your existing business, the Netherlands offers a wealth of opportunities.
In this article, we'll guide you through the essential steps to get your Dutch business up and running. From registering your company and choosing the right legal structure to navigating tax requirements and accessing funding options, we've got you covered. We'll also share insights into the Dutch market, highlighting key industries and sectors with growth potential.
Not only will you gain practical advice and tips, but you'll also learn about the unique cultural and business norms that will help you thrive in the Dutch business landscape. So, if you're ready to embark on this exciting journey, let's dive in and make your Dutch business dream a reality!
Entrepreneurs Visa in The Netherlands
Obtaining residency in the Netherlands is possible, and several immigration programs are available, but based on the information that we typically receive on the leads/entrepreneur's situation, we believe it will be very hard to obtain residency as an entrepreneur.
In general it’s considered difficult to obtain an entrepreneurs via in the Netherlands unless you're planning to appoint at least 3 staff members in the first 18 months, and expect a healthy profit. The start-up visa process, and Entrepreneurs Visa process are very similar, aside from the 'innovative' aspect, it's sin both casesl about the potential to scale a business.
The first step to obtain the Self Employed Entrepreneurs Visa is to prepare a business plan.
Company Formation in Germany or Netherlands
Company formation in Netherlands and Germany can be very straightforward, and be finalized within several days.
In case of The Netherlands company, you can finalize the formation remotely , and without capital deposit. While in Germany, a visit is suggested because a bank account will also need to be opened.
There is no requirement to appoint a local director or shareholder in Netherlands or Germany.
On average, it takes ten days to set up a company in Germany:
Company name check with local chamber of commerce
Preparation of the necessary power of attorney to attend
the notarial deed for the incorporation (for remote formation of the company without visit to the notary)
Attendance of notarial deed for incorporation upon power of attorney
Assistance with the preparation of the articles of association
In the first year there are certain (legal) issues that need to be taken care of, such as:
- Opening of a Bank Account
- Application of a VAT Number
- Translation and processing of incoming mail to the registered office (which is in Dutch or German)
- Dealing with the Tax authorities/Chamber of Commerce (concerning the formation of the new company, etc.)
Become a Travel Agency
Are you planning to start a travel agency in the Netherlands? This might be easier than you think! There is no license requirement in the Netherlands, although there are some matters to consider. Since the Corona outbreak, there has been a massive shift in this industry.
The tourism industry is one of the largest economic sectors worldwide. The number of holidays in the Netherlands, despite the current economic crisis, will grow to around 40 million in 2015, a growth of 13.8% compared to 2007 (source: NBTC-NIPO Research).
Competition in tourism is high, and there has been a scaling up for several years: the smaller players on the market are being pushed aside by their larger competitors, but there will always be room for niche players. Technological developments such as the rise of the Internet have changed the travel industry definitively. The customer has a lot of choice via internet and so-called direct sellers. For traditional travel agencies, the combination with the internet is of vital importance. A travel agency will mainly have to distinguish itself through good service provision and the delivery of customization.
Intro to Dutch Corporate Income Tax
What is corporate tax? Corporate tax is the tax that a company pays on its profits. The taxable profit is calculated per financial year. A company pays tax on the taxable profit: corporation tax.
Corporation tax is abbreviated as VPB. A company therefore often refers to a corporate income tax return . This tax is paid only by companies with legal personality.
This page is a basic introduction to corporate taxation in the Netherlands. Our Dashboard also will provide a Corporate Tax Guide for professionals, and a tutorial on how to submit a corporate tax return in The Netherlands yourself, without involving an accountant!
Corporate tax in The Netherlands is typically paid after the end of the (fiscal) book year, once the Financial Statements have been prepared, and the corporate income tax return is filed.
Companies without legal personality, such as a sole proprietorship and a VOF, do not have to file a corporate tax return. The profit return is part of the income tax return for these entrepreneurs .
In The Netherlands, most public and private companies must pay corporation tax on their profits.
Meaning the more CIT you have to pay, the more you earn! But if your Dutch company has not made any profits, and it does not have to pay any taxes, it will be required to file its annual income tax return.
Who pays corporate income tax?
As mentioned above, most public and private companies pay Corporate Income Tax. This CIT is calculated on the profit of the company.
There are legal entities who don't have to pay CIT. For example, funds for joint accounts are not taxable for CIT in The Netherlands.
In general, Dutch resident companies are subject to corporate income tax on its worldwide income. Specific income can be exempted according to Dutch law. Dutch law also states that non-resident entities are limited liable for taxes. These companies are only liable for their income from The Netherlands (foreign taxpayers). This is relevant for companies that are managed and directed from abroad, these companies are not taxed in The Netherlands during their first operating year. (see corporate residence article)
File ICP Return
In addition to the (quarterly) VAT return, your Dutch business might be required to submit the declaration of intra-Community transactions, which involve all services and supplies to other EU countries.
Do you export services or goods to companies in other EU countries? Then you are obliged to submit an ICP declaration .
ICP Filing in the Netherlands is usually done in combination with a VAT return. In the declaration, you indicate which part of your performance was directed to other EU countries. The data of those business transactions is exchanged between EU countries. The Tax and Customs Administration then checks the transactions on the basis of the ICP declaration.
Here you enter all intra-Community supplies and intra-Community services for customers who have to file a VAT return in other EU countries. You must also state the value of your own goods that you have brought to another EU country on the ICP declaration. We call this fictitious intra-Community supplies.
European legislation changes the threshold for filing ICP (Intra-Community Performance) declarations as of 1 January 2016. Where this threshold is currently at € 100,000 per quarter, this threshold is lowered to € 50,000 per quarter. This is about the total amount, excluding VAT.
As a result of the lowering of the threshold, more entrepreneurs now have to submit an ICP declaration every month.
Do you transport goods to another EU country and do you deliver these goods to an already known customer later? Then you no longer need to register in the EU country of arrival from 1/1/2020. You can specify this transfer in the ICP declaration via the new Transfer of stock on demand scheme.
The Dutch abbreviation ‘ICP’ (in Dutch is: Intracommunautaire Prestaties) stands for ICT; Intra-Community Transactions.
What kind of transactions are relevant for your ICP/ICT declaration?
You are obliged to declare ICP about your:
transferring own goods to another EU country
transfer of stock on demand
You indicate intra-Community deliveries in the period of the invoice date. You indicate intra-Community services in the period in which you provided the service. You do not have to submit an ICP declaration if you have not supplied anything in a period. You transfer stock on demand in the period in which the transport of the goods started.
Compare the ICP declaration with your VAT return
The supplies and services that you state on the ICP declaration are a specification of the amount that you enter in section 3b of your VAT return. The total of the ICP declaration must therefore be equal to the amount that you enter over the same period in your VAT return under Section 3b 'Deliveries to / services in countries within the EU'.
Correct previous declaration
Have you made a mistake? You can correct this by entering the correct information in the following ICP statement. Does your customer not accept the goods and send them back? You can read how to correct your declaration at Your customer does not accept the goods.
From 1 April 2020, it is mandatory to state the transfer of stock on demand in your ICP declaration. You do this in the section "Transfer of stock on demand". From that moment on, the notification is also retroactively mandatory for periods from 1 January 2020. Do you submit a statement per month? Then you will process the notification for the previous months in your declaration for March.
Are the services in your customer's country taxed with 0% VAT or exempt? Then you should not mention them in this statement.
File a VAT Return
Filing your own VAT returns in the Netherlands might be easier than you think. Especially if your company only had few transactions, and you are planning to charge back VAT that you paid on your purchase invoices.
This VAT filing guide will provide you all the details you need, to understand the VAT requirements, and also to submit the VAT return via the online portal of the Dutch Tax & Customs administration.
Your Dutch company (or foreign entity, that applied for a VAT number in the Netherlands) has file a VAT return every quarter (within 4 weeks after the end of the (calendar) quarter). In some cases, a VAT return can be submitted on a monthly, or yearly basis. Make sure you submit your declaration and payment on time.
If your company has not been issued a VAT number, you are not able to submit a VAT return. In case your company performed any VAT-relevant transactions, it should register for a VAT number, before it can file it first VAT return.
In this chapter you will read all about how to file your VAT Return, and the important matters that you should consider when submitting your VAT return.
The VAT return can be filed online, by accessing ‘My Tax Portal for entrepreneurs’.
You are (still) able to login with the username and password you received from the Tax & Customs Administration via an official letter, right after your company was registered.
What info do you have to submit in your VAT return?
In the declaration you state the VAT that you have charged to your customers, and the VAT that your suppliers have charged you.You would also mention the purchases of goods or sales from within Europe, for which your suppliers have applied the reverse charge method.
You can find more information on the VAT requirements here.
Submitting your VAT Return, and paying the VAT
After you have completed and submitted the VAT return, you will receive a confirmation of receipt. If you get a VAT refund, the Tax & Customs Administration (TCA) will notify you within a few weeks. If your business has to pay VAT (which you already charged your customers via the VAT surcharge on your sales invoice) , you must do so at the latest on the date stated in your online tax portal. If you do not pay or do not pay on time, the TCA can impose an additional assessment or a fine. When paying through your (overseas) bank account, you must take into account a few days of processing time.
Are you a starting entrepreneur? The Tax & Customs Authorities will send you the 1st VAT return digitally or on paper. You often receive your 1st VAT return on paper. Sometimes you will receive your 1st VAT return digitally (depending on your formation date).
If you have to pay VAT, you will receive an additional assessment with a giro collection form. Do you get a VAT refund? Then you will receive a refund decision. This is a letter stating how much you will get back.