VAT in Netherlands is imposed at each level of production and distribution of goods and services. VAT (Value Added Tax) is imposed on the price which is equal to the difference between a commodity's price before taxes and commodity's cost of production.
Transactions fall under the category of VAT
The common transactions that fall under the category of VAT (Value Added Tax) include:
- At the time of purchase of inputs by the entrepreneurs.
- Acquisitions of new kinds of transport within Netherlands.
- In the event if goods are imported from outside the European Union
Taxable entities
Corporate entities, natural persons, organizations and partnerships are regarded as taxable entities. A group of entities forming a single organizational, financial and economic unit will be regarded as a fiscal unit. In that case, the supply of goods and services within the unit, will not fall under the jurisdiction of VAT.
Taxable Activities
Taxable activities are of four types. These are as follows:
- Goods acquisition through business operations
- Import of goods
- Goods supply
- Service Delivery
VAT refund
A VAT return will be considered as an application for a VAT refund, if the VAT charge becomes less than the amount of input tax.
VAT Tax Rates
The normal rate of VAT tax is 19%. A reduced rate of 6% is applicable to the commodities like medicines and foodstuffs. Some of the other commodities and services that are subject to reduced rate include books, water, newspapers, magazines, artificial limbs, passenger transport, entrance fees for sports events and cinemas. No VAT tax will be levied on the items like aircraft used for international transport. Any entrepreneur doing business as natural or legal citizen in Netherlands, must pay VAT. The entrepreneur needs to be registered with the tax office in Netherlands. After registration, the entrepreneur will get a VAT number and accordingly need to send VAT returns at applicable dates.