What is a VAT return?

What is a VAT return?

A Value Added Tax (VAT) return in the Netherlands is a periodic declaration that businesses submit to the Belastingdienst (Dutch Tax and Customs Administration). It reports the VAT a business has charged customers (output VAT) and the VAT it has paid on business-related expenses (input VAT). The process determines the net VAT payable to the tax authorities or refundable to the business.

Key Components of the Dutch VAT Return Process

1. Charging VAT to Customers:

   • Businesses add VAT to the prices of their goods or services.

   • Standard VAT rate: 21% for most goods and services.

   • Reduced rate: 9% for essentials like food, medicines, and books.

   • Zero rate: 0% for specific cases, such as exports.

   
   

2. Deducting Input Tax:

   • VAT paid on eligible business expenses and purchases can be deducted from the VAT collected from customers, reducing the total VAT liability.

   
   

3. Filing the VAT Return:

   • Most businesses are required to file VAT returns quarterly. Some may file monthly or annually, depending on turnover or specific circumstances.

   • Returns must be submitted digitally. The return can be filed by FinTaxNL Solutions. In some cases, you need eHerkenning.

   
   

4. Payment Deadlines:

   • The VAT return and any payments are due by the last day of the month following the reporting period. For example, the Q1 VAT return (January to March) is due by April 30th.

   
   

5. Small Business Scheme (Kleineondernemersregeling - KOR):

   • Businesses with annual turnover under €20,000 can opt for the KOR, which exempts them from charging VAT and simplifies administration. However, they cannot deduct input VAT while participating in the scheme.

   
   

6. Intra-Community Transactions:

   • Businesses supplying goods or services to customers in other EU countries must complete an Intra-Community Transactions Declaration (ICP declaration) quarterly, detailing VAT identification numbers of customers and the total amount supplied.

   
   

7. Record-Keeping:

   • Businesses must maintain accurate records of transactions, including invoices issued and received, to support their VAT declarations.

Compliance Notes

• Timely submission of returns and payments is critical to avoid penalties.

• Maintaining thorough documentation ensures the accuracy of VAT reporting and compliance with regulations.

• Businesses can consult FinTaxNL Solutions for specific guidance tailored to their operations.

This process ensures that businesses in the Netherlands meet their VAT obligations while maintaining the principle of VAT neutrality.