Almost every entrepreneur or freelancer is required to charge VAT (BTW) on his goods or services. This VAT must then be paid to the Tax Administration (Belastingdienst). If you are required to charge VAT, you may deduct the VAT you pay on your expenses, subject to conditions. This is not as simple as sounds though! Special rules apply if you deduct VAT for something you use for private purposes as well. And no VAT whatsoever may be deducted from certain expenses.
Most small businesses do their VAT returns once a quarter. The Tax Administration decides on the frequency, but in some cases you can ask to diverge from this. If completing it quarterly, you will submit your return in April, July, October and January. Payments must be made simultaneous to completion of the return and deferment is not possible.
VAT rates
There are three VAT rates in the Netherlands: 21%, 9% and 0%. The law stipulates when 9% or 0% may be charged. The high 21% rate applies in all other cases. Sometimes goods or services are exempt from VAT. In this case, you may not deduct the VAT from expenses either.
VAT and business overseas
It is fairly easy to do business with foreign companies. However, people who operate cross-border are subject to international rules. And these rules are often far from simple. When doing business within the EU, sometimes you must charge the Dutch VAT rate, sometimes the 0% rate and sometimes you have to reverse-charge the VAT to the buyer.
You might also be required to charge the VAT rate applicable in your customer’s country. In that case, you will have no choice but to register as an entrepreneur for VAT purposes in the relevant country and familiarise yourself with the rules that apply there.
Doing your own VAT returns
An entrepreneur may do his/her own VAT returns. Remember, however, that VAT seems much simpler than it actually is. Have your returns checked by an expert on a regular basis. This will enable you to correct any mistakes you make.