VAT declaration: the basic rules – CM Web

As any controller knows, tax rules can get pretty complex pretty quickly. That is why you will find articles on cmweb.nl about all possible different scenarios for VAT declarations. In this article, we guide entrepreneurs through the basic rules for VAT.

In principle, entrepreneurs owe VAT on the turnover achieved. There is an exemption for a number of activities and a low fee for some activities. But most entrepreneurs contribute by default 21 percent of their turnover. This amount is passed on to customers and then transferred to the Tax Office, once a quarter for most small businesses, but monthly for amounts where 15,000 euros or more of turnover tax is payable per transaction. quarter.

NB: The statement for each period must also be submitted if no revenue has been generated. This is especially the case for starters and certain self-employed people.

Three VAT rates

There are three VAT rates in the Netherlands:

VAT rate: 0 percent

Companies that deliver internationally within the EU no longer pay VAT in the Netherlands. Since summer 2021, they pay the local rate in the recipient’s country. This rate also applies to international passenger transport, transport mediation, storage and import as well as work on goods exported to countries outside the EU. Excise goods, fishing, goods that have not yet been imported, or supplies from ships and aircraft are in some cases also covered by the zero rate. You must be able to document with your administration that you deliver to a customer within the EU. When it comes to business supplies, this can be done, for example, with the VAT number of the entrepreneur with whom you do business. For consumers, you can prove export within the EU with, for example, a copy of the waybill or a transport declaration. Entrepreneurs who pay VAT in other EU member states can often claim this VAT back.

>> Read also: 5 questions about tax plans for fruit, vegetables and sugar

VAT rate: 9 percent

Certain manufacturers and service providers charge the low rate. As a starting point, this rate applies to products and services that the government deems necessary. A lower rate applies to remedy low incomes, for example for food, medicine and books. But also on services such as bicycle repair, a haircut or overnight stays. Tax shows which entrepreneurs charge a low rate for goods or services.

VAT rate: 21 percent

This is the standard rate that applies to most entrepreneurs. 21 percent applies to all entrepreneurs who are not entitled to the low rate or who are exempt.

A number of professions are exempt from VAT. For example, entrepreneurs who work in the funeral industry and the activities of certain journalists, activities developed under the canteen scheme and entrepreneurs who fall under the Care Act do not pay VAT. You can read which entrepreneurs are exempt in which cases at the Tax Office.

>> All articles from cm: by VAT expert Carola van Vilsteren are listed here

Bad invoices and VAT

You pay VAT on the basis of the invoice date, regardless of whether the invoice has been paid in the meantime. In that case, you defer the VAT with the declaration and payment to the tax authorities until payment from the customer. If an invoice turns out to be irrecoverable, for example because the customer has gone bankrupt, you can claim the paid VAT back from the tax authorities. This is only possible one year after the payment date stated on the invoice. At that time, the uncollectible invoice can be set off in the indication of the new period.

NB: If an invoice of a debtor who cannot pay is converted into a loan, this counts as payment for VAT and cannot be set off. If the loan is not paid later, you can no longer offset this VAT.

Change rule

In a number of cases, the entrepreneur you deliver to pays the VAT. The tax authorities then refer to the transfer of VAT to the customer. The mechanism for reverse payment obligation finds e.g. application to the outsourcing of personnel in certain sectors, forced auctions and the provision or purchase of certain services abroad. The tax authorities offer this tool to analyze whether the reverse charge mechanism applies. If this is the case, the customer will complete the VAT declaration and indicate ‘VAT refunded’ on the invoice, indicating the VAT registration number of the customer to whom the VAT has been refunded.

>> Read also: VAT and the domestic reverse charge mechanism

If VAT has been refunded to you, you must state in the declaration how much has been refunded to you based on the invoices that indicate this. You enter these amounts in section 2 ‘Domestic reverse charge arrangements’ or in section 4 ‘Services supplied to you from abroad’. If you have refunded VAT, you must enter the turnover to which it applies in the turnover statement. You do this under section 1 ‘Performance at home’, or under section 3 ‘Performance to or abroad’.

before taxes

Entrepreneurs can deduct the VAT on business expenses from the VAT that the entrepreneurs pay on the turnover. The Tax Agency then talks about ‘deduction as input tax’. On the declaration, there is a field ‘input VAT’, where you enter the VAT that suppliers have charged in the period in question. The tax authorities deduct this amount from the turnover tax due.

>> More about VAT deductions: VAT and collection costs

NB: You cannot deduct a number of items from VAT, but you can enter them as business expenses under corporation tax or income tax. This applies, among other things, to food and drink in the catering industry, gifts and private purchases.

Corrections to the VAT return

Corrections to VAT returns can be set off in the next tax return, provided the amount does not exceed 1,000 euros. There will be no further assessment or refund decision because the correction is incorporated into the new assessment.

If you exceed 1,000 euros, you must submit corrections via the digital turnover tax supplement form via the entrepreneur portal. A correction prevents fines and interest from increasing further. There you enter not only the improvements, but also the VAT already stated in the box ‘Balance already stated amount for this additional period’. After this correction, the Tax Agency sends a supplementary assessment or repayment decision. If the supplementary form is submitted within three months of the end of the period in which VAT was due, you will receive interest on arrears, but no tax interest.

Fines

Tax issues a fine if the tax return is not filed on time. For most small businesses, this is a period of one quarter and when the last date of the period has passed. This is followed by a penalty period of 7 days. A non-appearance fine can also be imposed if too little VAT has been paid. The standard fine is 3 percent of the unpaid amount with a minimum of 50 and a maximum of 5,514 euros.

If you deliberately do not submit a supplement, but VAT is due, the tax authorities can impose a negligence penalty. In many cases, entrepreneurs can count on a standard fine of 5 percent if they fail to correct errors. But if it is deliberate, it will be a fine. This corresponds to 50 percent of the tax you have deliberately withheld and can go up to 100 percent.

In the case of gross negligence instead of intent, the fine is 25 percent of the amount. In addition, Tax examines whether there are reasons or circumstances to further increase or decrease the fine. The fine will be higher if, for example, you have already received an infringement fine or if fraud is involved. The fine is lower if there are mitigating circumstances.

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