VAT in the Netherlands – tax on goods and services

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VAT number in the Netherlands is known as BTW and applies to most entrepreneurs who carry out business activities and derive income from them. Conducting sales that are subject to BTW requires special VAT settlements. All transactions made by the entrepreneur should be documented by an invoice. It is this invoice that will constitute the document allowing for the deduction of input VAT

Dutch VAT – tax rates

There are three basic BTW tax rates in the Netherlands: 0%, 9% and 21%. The highest of these is applied most often to most products and services and is therefore called the standard VAT rate.

The 0% VAT number in Netherlands rate applies to companies doing international business. It mainly applies to businesses involved in the distribution of goods abroad and the interstate transport of travellers and passengers. When using the 0% rate, you are still entitled to deduct VAT from your quarterly statement to the Dutch tax authorities, as opposed to being completely exempt from VAT, which you will learn about below.

The 9% rate, otherwise known as the low tariff, applies to a wide range of regular goods and services. It applies to hairdressing services, cleaning services bicycle repair, construction work, culture and recreation or accommodation, among others.

The 21% rate is the most common VAT number Netherlands. It applies to other services and goods not assigned to another group. In the process of doing business, the first thing to do is to choose the right tax rate for the services offered, so it is essential to know the rules in the Netherlands.

VAT Netherlands – new BTW numbers

From 1 January 2020, a new BTW-identificatienummer (BTW-ID) will apply to all sole proprietorships, replacing the previous BTW numbers. The change was made for reasons of business privacy – the old version included a BSN number. The new BTW-ID number will consist of the NL country code, 9 digits, the letter B and 2 check digits. The BTW-ID is required by the tax office for the calculation of VAT and must be indicated on every invoice so that customers can verify it. It can therefore be called the equivalent of the Polish tax identification number (NIP)

VAT Netherlands for entrepreneurs – quarterly settlement

VAT in the Netherlands is settled on a quarterly basis in most cases, only sometimes at the request of the Belastingdienst can this change into a monthly process.

Terms for settling BTW tax in the Netherlands

1st quarter – 01-01/31-03 – settled by 30-04,

2nd quarter – 01-04/30-06 – settled by 31-07,

3rd quarter – 01-07/30-09 – settled until 31-10,

4th quarter – 01-10/31-12 – settled until 31-01 of the following year.

Please note that even if you have not earned any income or incurred any expenses in a quarter, you are still required to file a BTW return. If you do not file a BTW return, you will be charged a minimum penalty of €65 and an accrued tax to pay.

Every Entrepreneur who pays VAT number Netherlands must also settle the income tax once a year, which is calculated on the entire income of the year. In addition, a compulsory contribution to health social insurance (ZVW), which amounts to 5.45%, must be added.

If you are self-employed for example in Poland, you may apply for a refund of VAT number in Netherlands, which was calculated on the basis of costs incurred outside the country. The basis for this will be documents confirming the tax paid in the form of receipts and invoices.

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