On June 19 2001 the Dutch Ministry of Finance released a decision regarding value added tax (VAT) on web site construction, and the development and maintenance of web sites. So far the VAT treatment of digital supplies of services, and e-commerce or internet-related services in general, is uncertain. The EU VAT Directive (77/388/EEC) and the VAT regulations in EU member states are not equipped to deal with all the new developments in this field.
The Dutch ministry's decision provides some certainty. The ministry considers constructing a web site similar to the supply of a software product that has been tailored to the specific needs of the customer. The applicable VAT consequence of such a service should therefore be that (in the case of cross-border transactions and in a business-to-business situation) VAT will become due on the service fee in the country of the recipient, while the recipient will have to account for the VAT due (reverse charge). The Dutch ministry considers Article 6.2(d) of the Dutch VAT Act equivalent to Article 9.2(e) of the EU directive.
Maintenance of a web site will generally consist of improving and adjusting the software of existing web sites. According to the ministry this will trigger a similar VAT treatment.
For further information on this topic please contact Jan LN Snel at Baker & McKenzie, Amsterdam by telephone (+31 20 551 75 17) or by fax (+31 20 626 79 49) or by e-mail ([email protected]).
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