How to Account For VAT in the Netherlands?

Expanding your own business involves looking for new markets. In order to obtain a satisfactory level of income, it is advisable to sell goods and services within the various countries of the European Union. One popular country is the Netherlands, which is preferred by many people for doing business and is even described as a tax haven. Regardless of colloquial opinions, it is worth finding out what the tax system in the Netherlands is really like.

BSN and VAT Identification Numbers

Doing business in the Netherlands for an extended period of time is linked to the need to obtain a BSN identification number, which is given to every person who wishes to live and work in the country. The BSN is a number used to process personal data and is required to use a wide variety of services in the Netherlands, including when registering a company. Another issue is obtaining a VAT number in Netherlands, which is necessary for the payment of turnover tax. All taxpayers who operate in the Netherlands are obliged to register, and are therefore also required to pay VAT.

New VAT Registration Numbers From 2020

The VAT number in Netherlands is also referred to as a BTW number. It is worth mentioning that new VAT identification numbers for sole traders in the country have been issued in 2020. Currently, a VAT number in the Netherlands consists of the country code NL, nine digits, as well as the letter B and two check digits, for example 123456789B01. To verify that the VAT number provided is correct, you can use a tool provided by the European Union called VIES or VAT Information Exchange System. This can be a basic form of checking and obtaining reliable information on companies. However, it should be noted that this system does not provide information on companies registered in countries other than EU countries and Northern Ireland.

Basic VAT Rates in the Netherlands

There are three main VAT rates in the Netherlands: the standard rate of 21%, the reduced rate of 9% and the 0% rate. The reduced rate can be applied to products such as medicines, food, books and magazines. The zero rate mainly applies to services related to the international transport of people or goods. In the Netherlands, certain products are also exempt from VAT. This is a group of goods and services related to healthcare, education, childcare, banking services, as well as trade in real estate. The list of VAT exemptions is long and covers many categories, so it is advisable to look into the specific regulations and tax rate reductions before starting a business.

Rules for Filing Tax Returns

VAT returns in the Netherlands are filed monthly, quarterly or annually. Quarterly returns are the most common, but this can easily be changed by sending a letter to the Tax and Customs Administration. This is the government organization responsible for levying, collecting taxes and also implementing various reliefs and schemes for Dutch residents. Some tax regulations may be unclear or you may be unsure how to apply them. For this reason, it is advisable to use the services of a specialized accounting office to take care of your comprehensive VAT settlement in the Netherlands. You can then be sure that everything you do will comply with the dynamically changing laws in this country.