On 1 October 2012, the standard VAT rate in the Netherlands was increased from 19 percent to 21 percent. The low VAT rate of 6 percent remains unchanged. The new standard rate applies to all supplies completed after 30 September 2012. If such supplies were already invoiced with 19 percent VAT, an additional 2 percent VAT will become due and corrective invoices must be sent. By law, suppliers are entitled to recover this additional VAT from their customers.
With respect to the supply of real estate, the 19 percent rate applies to all installments that expired before 1 October 2012. For new houses, installments that expired before 1 October 2013 are subject to the 19 percent rate, provided that the sales contract was concluded before 28 April 2012.
With respect to continuous services (management, leasing services, telecommunication services, advisory services and the like), a split must be made between services completed before 1 October 2012 (subject to 19 percent) and after (subject to 21 percent). Additional invoices may be required. Our office has ample expertise in concluding practical arrangements with the tax authorities in this regard.
In anticipation of the Dutch VAT hike, we recommend the following:
- Timely adjustment of the financial systems in order to ensure the use of the 21 percent VAT as of 1 October 2012
- Screening of transactions executed during the transition to the 21 percent VAT rate (during the period before and after 1 October 2012) in order to determine the correct VAT rate
- Determination of the appropriate procedure or approach regarding the (possible) additional 2 percent VAT assessment on 1 October 2012
- Screening agreements on appropriate language preventing a possible VAT risk
- Screening the companies private use of company goods and/ or services
- Determination of the impact of VAT hike on the general VAT position (right to deduct input VAT) and optimise VAT position if necessary