netherlands-vat by worldtradepresss

Worldwide VAT, GST and Sales Tax Guide

Amsterdam

Street address:

Mail address: Antonio Vivaldistraat 150 P.O. Box 7925 1083 HP Amsterdam 1008 AC Amsterdam The Netherlands

The Netherlands

Indirect tax contacts

Folkert Gaarlandt

Bas Breimer

+31 (88) 407-0559 folkert.gaarlandt@nl.ey.com

+31 (88) 407-1005 bas.breimer@nl.ey.com

Gijsbert Bulk +31 (88) 407-1175 gijsbert.bulk@nl.ey.com

Annemarie Sanders +31 (88) 407-1179 annemarie.sanders@nl.ey.com

Michel Zeegers

Eindhoven

+31 (88) 407-2152 michel.zeegers@nl.ey.com

GMT +1

Street address:

Mail address: Prof. Dr. Dorgelolaan 12 P.O. Box 455 5613 AM Eindhoven 5600 AL Eindhoven The Netherlands

The Netherlands

Indirect tax contact

Timo Bootsman

+31 (88) 407-4876 timo.bootsman@nl.ey.com

Rotterdam GMT +1

Street address:

Mail address: Boompjes 258 P.O. Box 2295 3011 XZ Rotterdam 3000 CG Rotterdam The Netherlands

The Netherlands

Indirect tax contacts

Remco van der Zwan

+31 (88) 407-8370

remco.van.der.zwan@nl.ey.com

Daniël Kroesen +31 (88) 407-8361 daniel.kroesen@nl.ey.com

Caspar Jansen

Petra Pleunis

+31 (88) 407 1441 caspar.jansen@nl.ey.com

+31 (88) 407-3797 petra.pleunis@nl.ey.com

apply a special scheme. Under this scheme, small and medium enterprises (SMEs) will have to register for VAT, but they will not have to issue invoices or file VAT returns. This means that they also cannot deduct any input tax. Businesses that decide to opt out of this scheme cannot reapply for a three-year period.

Voluntary registration and small businesses. The VAT law in the Netherlands does not contain any provision for voluntary VAT registration. Taxable persons established in the Netherlands with an annual Dutch taxable turnover below EUR20,000 can voluntarily apply for the SME-simplification (see above).

Group registration. Taxable persons established in the Netherlands (including fixed establishments) may form a VAT group if the members are closely bound by “financial, economic and organizational links.” Formation of a VAT group no longer requires a decree from the tax office, which is issued after a written request. However, the tax office may also issue a VAT group decree on its own accord.

The effect of VAT grouping is to treat the members as a single taxable person. As a result, transactions between members of the VAT group are disregarded for VAT purposes. Dutch VAT group members may file a single VAT return, or members may elect to file individually.

All members of a VAT group in the Netherlands are jointly and severally liable for each other’s unpaid VAT debts.

There is no minimum time period required for a VAT group duration. Businesses are included in a VAT group for the period during which the relevant substantive requirements are met.

Holding companies. Holding companies established in the Netherlands with no other activities than the mere holding of shares are allowed to be included in a VAT group together with their subsidiaries, if they carry out “directional and policy-making activities” on behalf of the group and after filing a request.

Cost-sharing exemption. The VAT cost-sharing exemption (VAT Directive 2006/112/EEC Article 132(1)(f)) has been implemented in the Netherlands. This provides an option to exempt support services that the cost-sharing group supplies to its members, providing certain conditions are met (in accordance with specific requirements laid out in the Netherlands VAT law).

The supply of services by independent groups of persons to their members can be exempt from VAT in the Netherlands, provided that the members perform VAT exempt or nontaxable activities, the recharges to the members do not exceed the amount of costs incurred by the group, the services are directly necessary for the activities of the members and the exemption does not cause distortion of competition. Designated services, including but not limited to the provision of staffand IT-related services, cannot be exempted from VAT.

Fixed establishment. A fixed establishment is generally understood to be a business establishment in the Netherlands of an entity established outside of the Netherlands, characterized by a sufficient degree of permanence and a suitable structure in terms of human and technical resources to enable it to provide the services that it supplies and/or to receive and use the services supplied to it for its own needs. A fixed establishment should be capable of acting as a taxable person independent of the head office.

Non-established businesses. A “non-established business” is a business that is not established and that has no fixed establishment in the Netherlands. A non-established business that makes supplies of goods or services in the Netherlands must register for VAT if it is required to account for VAT on those supplies.

Tax representatives. Nonresident businesses may register for VAT without appointing a tax representative. In limited circumstances, businesses that are established outside the EU must appoint

a tax representative resident in the Netherlands to register for VAT (for example, for distance sales made from another EU country to Dutch private individuals (nonbusinesses)). Non-established businesses, regardless of whether they are established in or outside the EU, may choose to appoint a representative. In some cases, the appointment of a resident tax representative may be advantageous (for example, for dealing with imports using the “import VAT deferment” facility; see Section E).

Non-established businesses that do not appoint a representative must register at the Tax Office for Nonresident Businesses in Heerlen, at the following address (or electronically, see the Registration procedures subsection below):

Belastingdienst/kantoor Buitenland

Postbus 2865

6401 DJ Heerlen Netherlands

Reverse charge. The reverse-charge provision applies generally to supplies of goods and services made by non-established businesses to taxable persons and to other nontaxable legal persons established in the Netherlands, provided that Dutch VAT is due on these supplies. Under the reversecharge provision, the taxable person or legal person that receives the supply must account for the VAT due. If the reverse charge applies, the non-established supplier may not account for VAT in the Netherlands. The reverse charge does not apply to supplies made to private persons.

Domestic reverse charge. For certain specific transactions, even if they are carried out between locally established businesses, the recipient of the transaction is liable for the Dutch VAT on the supplies. This applies, for example, to:

• The supply of used material that cannot be reused in the same state, scrap, industrial and nonindustrial waste, recyclable waste, partly processed waste and certain appointed goods and services

• Supplies of mobile telephones, integrated circuit devices such as microprocessors and central processing units, if the total value of the supply exceeds EUR10,000

• Supplies of telecommunications services between telecommunications services providers

Digital economy. Specific VAT rules apply to cross-border supplies of goods and services sold via the internet (e-commerce) in all EU Member States with effect from 1 July 2021. These new rules apply to all direct sales to nontaxable persons (in practice, these are mostly private individuals), but we refer to these rules as e-commerce VAT rules because most of these transactions are conducted via the internet. In general, the place of supply is in the country of consumption, i.e., where the goods are shipped to or where the buyer of the goods or services resides, subject to any “use and enjoyment” provisions that may override this rule (see Section B, Effective use and enjoyment subsection above). Therefore:

• For supplies of services made by a nonresident supplier to a business customer (B2B), the business customer is responsible for accounting for the VAT due, using the reverse charge.

• For supplies of goods made by a nonresident supplier to a business customer (B2B), where the goods are transported from another EU Member State, the business purchasing the goods is responsible for accounting for the VAT due, as an intra-Community acquisition. If the goods come from outside the EU, the purchaser may have to report an importation of goods.

• For supplies of goods or services made by a nonresident supplier to a final consumer (B2C), the supplier is generally responsible for charging and accounting for VAT due at the rate applicable in the customer’s country (unless the supplier’s sales fall beneath the distance selling threshold of EUR10,000 with effect from 1 July 2021). This VAT can be reported using a single VAT registration, using a “One-Stop-Shop” mechanism.

For more details about intra-EU distance sales, see the EU chapter.

account details, can and should be notified using the online portal. In case the VAT status of a company is changing from, e.g., established to non-established, the domestic VAT registration should be converted into a VAT registration at the Heerlen office.

D. Rates

The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT.

The VAT rates are:

• Standard rate: 21%

• Reduced rate: 9%

• Zero-rate: 0%

The standard rate of VAT applies to all supplies of goods or services, unless a specific measure provides for a reduced rate, the zero-rate or an exemption.

Some supplies are classified as “exempt-with-credit,” which means that no VAT is chargeable, but the supplier may recover related input tax, e.g., certain financial services provided to a customer established outside the EU.

Examples of goods and services taxable at 0%

• Exports of goods (from the EU to non-EU destinations)

• Intra-Community supplies of goods

• Supplies to ships and aircraft used for international transportation

• Supplies of solar panels for installation on or near residential properties

Examples of goods and services taxable at 9%

• Foodstuffs (as goods and as services)

• Books (hard copy as well as electronic publications)

• Paintings and other “cultural goods”

• Entrance to museums, concerts and similar events

• Passenger transport

• Hotel accommodation

The reduced VAT rate (9%) on agricultural goods (e.g., vegetables, livestock, seeds) and ser vices (e.g., processing) has been abolished. From 1 January 2025, the standard VAT rate (21%) will apply to these goods and services.

The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.

An important change has been proposed for 1 January 2026, as several reduced-rate supplies of goods and services will then fall within the standard rate. This change applies to, in the first place, hotel and holiday resort accommodations. Negotiations are taking place on the rate for books, newspapers, magazines, entrance to museums, concerts and festivals. If accepted, these changes will require preparation by businesses in the course of 2025.

Examples of exempt supplies of goods and services

• Supply of immovable property

• Medical services

• Financial services

• Insurance services

• Betting and gaming

• Educational services

Option to tax for exempt supplies. For the supply and letting of immovable property, the supplier and customer can opt for taxation. Several conditions must be met. The most important condition

• Taxis

• Business travel costs

• Business gifts (valued at less than EUR227 a year or if the recipient of the gift could have recovered the input tax in their own right)

• Business entertainment (subject to the limit of EUR227 a year on employee expenses)

Partial exemption. Input tax directly related to making exempt supplies is generally not recoverable. If a taxable person makes both exempt and taxable supplies, it may not recover input tax in full. This situation is referred to as “partial exemption.” Supplies that are exempt with credit are treated as taxable supplies for these purposes.

In the Netherlands, the amount of input tax that a partially exempt business may recover is calculated in the following two stages:

• The first stage identifies the input tax that may be directly allocated to taxable and to exempt supplies. Input tax directly allocated to taxable supplies is 100% deductible, while input tax directly related to exempt supplies is not deductible.

• The second stage identifies the amount of the remaining input tax (for example, on general business overhead) that may be allocated to taxable supplies and recovered. This takes place via the “pro rata” calculation. The pro rata calculation is a calculation that is normally based on the percentage of the values of taxable and total supplies made in the period of a financial year. The recovery percentage is rounded up to the nearest whole number (e.g., 5.2% becomes 6%).

In specific situations other methods of apportionment may be used, based on the actual use of goods and services.

Approval from the tax authorities is not required to use the partial exemption standard method or special methods in the Netherlands.

Capital goods. Capital goods are assets of capital expenditure that are used in a business over several years. Input tax is deducted in the financial year in which the goods are acquired or first used (if this is a later year). The amount of input tax recovered depends on the taxable person’s partial exemption recovery position in the financial year of acquisition or first use. However, the amount of input tax recovered for capital goods must be adjusted over time if the taxable person’s partial exemption recovery percentage changes during the adjustment period.

In the Netherlands, the capital goods adjustment applies to the following assets, for the number of years indicated:

• Immovable property: adjusted for a period of nine years after the year of first use

• Movable property subject to depreciation for income tax purposes: adjusted for a period of four years after the year of first use

The adjustment is applied each year following the year of first use, to a fraction of the total input tax (1/10 for immovable property and 1/5 for other movable capital goods). The adjustment may result in either an increase or a decrease of deductible input tax, depending on whether the ratio of taxable supplies made by the business has increased or decreased compared with the year in which the capital goods were acquired.

The adjustment is not made if it is insignificant (that is, less than 10% of the previously deducted amount for that specific year).

In the Netherlands, the capital goods adjustment does not apply to any services. However, a legislative change has been announced in September 2024. The proposed measure introduces an adjustment regime for services to immovable property exceeding EUR30,000 (excluding VAT). These include, e.g., refurbishments and renovations. A VAT-taxable business must monitor usage for four years after the investment, adjusting the deduction annually by 20% if the actual use deviates from the original use at the time of investment. The proposed effective date is 1 January 2026, but preparations for the change should begin in 2025.

This measure is expected to have a substantial impact on real estate owners (not just on investors), both financially and administratively. Additionally, there is likely to be further discussion about the definition of services and allocation to assets, and about implications for subsequent transactions.

Refunds. If the amount of recoverable input tax in a period exceeds the amount of payable output tax in that period, the taxable person has an input tax credit. A taxable person may claim a refund of the credit by submitting the VAT return for the period. The refund is paid in cash.

Pre-registration costs. Input tax on pre-registration costs is deductible if the (future) taxable person can demonstrate that the goods or services were used in preparation of a future economic activity. In practice, this means the VAT on these costs can be deducted in the first VAT return of the company. No specific time limits apply, other than the statute of limitations of five years.

Bad debts. If the payment of a debtor is no longer expected to be received, the VAT that was due on this payment can be reclaimed. VAT related to bad debts aged 12 months (or longer) can automatically be reclaimed in the regular VAT return. No separate refund request is required. If the bad debt for which VAT was reclaimed is (partially) paid by the debtor anytime in the future, the taxable person receiving the (partial) payment has the obligation to remit the reclaimed VAT (partially) to the authorities.

Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in the Netherlands.

Input tax directly related to noneconomic activities is generally not recoverable. If a taxable person performs both economic and noneconomic activities, it may not be able to recover input tax in full. This method of calculating the deductible proportion in such situation is referred to as “pre-pro rata.”

In the Netherlands, the amount of input tax that a business involved in economic and noneconomic activities may recover is calculated in the following two stages:

• The first stage identifies the input tax that may be directly allocated to economic and noneconomic activities. Input tax directly allocated to economic activities is deductible according to the partial exemption rules as outlined above, while input tax directly related to noneconomic activities is in principle not deductible.

• The second stage identifies the amount of the remaining input tax (for example, costs relating to the business as a whole) that may be allocated to economic activities and hence recovered. This takes place via the “pre-pro rata” calculation. The pre-pro rata calculation is a calculation that cannot always be based on the percentage of the values of economic and noneconomic activities, as not all noneconomic activities are remunerated. The pre-pro rata calculation is a topic of many discussions with the tax authorities in the Netherlands.

G. Recovery of VAT by non-established businesses

Input tax incurred by non-established businesses that are not registered for VAT in the Netherlands is recoverable. The Dutch tax authorities refund VAT incurred by businesses that are neither established nor registered for VAT in the Netherlands. Non-established businesses may claim Dutch VAT to the same extent as VAT-registered businesses.

EU businesses. For businesses established in the EU, refunds are made under the terms of EU Directive 2008/9/EC. The VAT refund procedure under EU Directive 2008/9 may be used only if

the business did not perform any taxable supplies in the Netherlands during the refund period (excluding supplies covered by the reverse charge). For full details, see the EU chapter.

Find below specific rules for the Netherlands:

• Under EU Directive 2008/9/EG, the EU tax authorities of the country where the VAT was paid must decide upon the request for a refund within four months after the date of the refund claim. In the case of a positive decision, the EU tax authorities of the country where the VAT was paid are required to repay the VAT within 10 days following the date of the decision. In the case of a late refund, the claimant is entitled to interest at the government interest rate in force at the time, in addition to the repayment.

Non-EU businesses. For businesses established outside the EU, refunds are made under the terms of the EU 13th Directive. For full details, see the EU chapter.

The Netherlands does not apply reciprocity requirements. VAT is normally repaid to businesses from all non-EU countries (i.e., no countries are excluded from the refund mechanism).

Find below specific rules for the Netherlands:

• The formal deadline for refund claims under the EU 13th Directive is 30 June of the year following the year in which the input tax is incurred. However, a claim may be submitted within five years after the year in which the input tax is payable. In the case of late claims, no appeal is possible against negative decisions.

• Claims may be submitted in Dutch, English or German.

• The minimum claim period is three months, while the maximum period is one year. The minimum claim for a period of less than a year is EUR400. For an annual claim, the minimum amount is EUR5.

• Applications for refunds of Dutch VAT must be sent to the following address:

Belastingdienst/kantoor Buitenland

P.O. Box 2865

6401 DJ Heerlen

Netherlands

• The Dutch VAT authorities have committed to make refunds within six months after the date on which the claim is submitted for the refund.

Late payment interest. No interest (on arrears) is payable by the tax authorities in the Netherlands to non-established businesses requesting a refund of VAT. However, if a VAT refund is granted and a (negative) assessment is sent, but the actual refund is not made within six weeks thereafter, (negative) collection interest may apply.

H. Invoicing

VAT invoices. A taxable person must generally provide a VAT invoice for all taxable supplies made to other taxable persons, including export supplies and intra-Community supplies.

A VAT invoice is required to support a claim for input tax deduction or a refund under the EU Directive 2008/9/EG or EU 13th Directive refund schemes (see the EU chapter).

Credit notes. A VAT credit note may be used to reduce the VAT charged and reclaimed on a supply. It must be cross-referenced to the original VAT invoice.

Electronic invoicing. Electronic invoicing is allowed in the Netherlands, but not mandatory.

Scope of electronic invoicing. For B2B, B2C and business-to-government (B2G) supplies, electronic invoicing is allowed but not mandatory in the Netherlands. This is in line with EU Directive 2010/45/EU and 2014/55/EU (see the EU chapter). There is no annual threshold that taxable

persons are required to adopt electronic invoicing in the Netherlands. The requirements related to electronic invoicing are the same as those for paper invoicing.

No specific requirements apply, if the issuer of the invoice ensures the authenticity, integrity and legibility of the invoice. It is not required to use a specific method, e.g., Electronic Data Interchange (EDI) or electronic signature, although these two meet the above requirements. It is not necessary to receive an explicit agreement from the customer to be able to use e-invoicing (they may agree tacitly) and no prior approval from the tax authorities is required.

For the EU VAT in the Digital Age (ViDA) proposals, refer to the EU chapter.

Simplified VAT invoices. Invoices are not automatically required for retail transactions, unless requested by the customer. However, the issuance of invoices for wholesalers is required.

A simplified invoice may be issued with respect to local supplies where the taxable amount of the supply is less than EUR100. Also, for credit notes, a simplified invoice may be issued. Simplified invoices should at least mention the following details:

• The date of issue

• Identification of the taxable person supplying the goods or services

• Identification of the type of goods or services supplied

• The VAT amount payable or the information needed to calculate the VAT amount

• Where the invoice issued is an additional, corrective or credit invoice, a specific and unambiguous reference should be made to the initial invoice and the specific details that are being amended

Suppliers of public transportation services, petrol stations and hotel and restaurant services do not have to issue a VAT invoice. However, VAT recovery is allowed on public transportation tickets and taxi receipts and petrol station receipts (the latter only if the means of payment allows for identification of the purchaser).

Self-billing. Self-billing is allowed in the Netherlands. Both parties involved must agree to selfbilling (there is no prescribed confirmation for this, but it is recommended to do this in writing). If the supplier on behalf of which the invoice was issued, does not want to accept the invoice issued on its behalf, it must inform the recipient (the issuer) of its objections. In that case, the invoice loses its status of a VAT invoice. The supplier must issue an invoice itself unless parties can agree on a way of adjusting the original self-invoice. Beside the standard invoicing requirements, the following applies: each self-invoice must contain a sequential number that uniquely identifies the invoice, and in addition, the self-invoice must contain the references “Self-billing” and “Issued in the name and on behalf of the supplier.”

Proof of exports and intra-Community supplies. VAT is not chargeable on supplies of exported goods or on the intra-Community supply of goods (see the EU chapter). However, to qualify as VAT-free, exports and intra-Community supplies must be supported by evidence that proves that the goods have left the Netherlands. Acceptable proof includes (a combination of) the following documentation:

• For an export, customs documentation, transport documentation, order forms and proof of payment issued by a foreign bank

• For an intra-Community supply, a copy of the invoice indicating the customer’s valid VAT identification number (issued by another EU Member State), plus a range of commercial documentation (such as purchase orders, transport documentation, proof of payment and contracts) as well as a timely filing of the European Sales Listing that includes the transaction.

For the Quick Fixes, in cases where a regular customer is responsible for the collection/transportation of the goods, a special document is required to substantiate that the goods have left the Netherlands (a “pick up declaration”), containing, among other things, the license plate number

of the vehicle collecting the goods and signatures from the supplier, the transporter and the recipient of the goods. As of 1 April 2024, the declaration can only be used if the goods are collected by the regular customer itself and no longer if a third party (e.g., a transportation company) collects the goods.

Foreign currency invoices. A VAT invoice can be issued in any currency, but the VAT amount must be indicated in the domestic currency, which is the euro (EUR), using the daily conversion rate published by the European Central Bank (ECB).

Supplies to nontaxable persons. Taxable persons do not have to issue VAT invoices for supplies to private individuals, with the exception of distance sales. Supplies of goods and services to nontaxable legal persons are generally required to be accompanied by a VAT invoice. If no VAT invoice needs to be issued, the documents (“invoices”) that are issued do not have to meet any of the VAT invoicing requirements.

Distance selling. For intra-Community distance sales made B2C, a full VAT invoice must be issued. However, if the supplier operates the OSS regime, then no full VAT invoice is required unless requested.

Records. In the Netherlands, examples of what records must be held for VAT purposes include records of all taxable supplies of goods and services, intra-Community acquisitions and imports, as well as all other data that are relevant for tax purposes, in the Netherlands or elsewhere in the EU. Furthermore, taxable persons are required to keep record of goods owned that are shipped to another EU Member State temporarily (e.g., for repair), as well as goods that are shipped to another EU Member State under the simplified call-off stock regime.

In the Netherlands, VAT books and records can be held outside of the country. It is not required for the records to be kept in the Netherlands, but all records should be made available to the tax authorities upon request within a reasonable time frame.

Record retention period. Taxable persons must retain invoices and all other documents/records that are relevant for VAT for a period of at least for seven years. For invoices and other records/ documents related to real estate, a taxable person must retain these for a period of 10 years.

Electronic archiving. Electronic archiving is allowed in the Netherlands. Documents that were not originally in electronic form may be converted to a digital format, if the business can guarantee the authenticity, the integrity and the legibility of the documents. Businesses must decide for themselves how they do this. In practice, the Dutch tax authorities do not issue written approval of a system used by a business for this purpose. Also note that businesses will have to keep certain documents in their original form, such as documents that determine the amount of duties due upon importation or exportation, e.g., certificates of origin of goods.

I. Returns and payment

Periodic returns. VAT returns are submitted electronically in the Netherlands. They are submitted for monthly or quarterly periods, depending on the amount of VAT payable.

As a main rule, VAT returns must be filed quarterly. Filing the VAT return monthly can be requested by the taxable person at the tax authorities. If the VAT due is not paid in time, the tax authorities also may require the taxable person to file the VAT returns monthly. The return must be filed by the last day of the month following the end of the reporting period, together with full payment.

Non-established businesses registered for VAT in Heerlen must file their VAT returns before the last business day of the second month after the reporting period.

For ESLs, if a business does not file an ESL on time, it receives a reminder. If the return is still not filed, the VAT authorities may impose a fine. The amount of the penalty depends on the number of successive omissions. The following penalties apply:

• For the first omission, a fine of 2.5% to a maximum of EUR5,514 is imposed.

• For the second and third omissions, a fine of 5% to a maximum of EUR5,514 is imposed.

• For a fourth or subsequent omission, a fine of 25% to a maximum of EUR5,514 is imposed.

Under certain conditions, the VAT authorities may impose a maximum fine of EUR5,514 for missing ESL reports or ESLs with systematic errors or omissions.

Penalties for errors. Penalties in the following amounts are assessed for VAT errors:

• For errors in the payment of VAT, the maximum fine is 10% of the VAT due, up to a maximum amount of EUR5,514.

In addition, taxable persons must file supplementary returns if it appears that the information provided was inaccurate and/or incomplete. Noncompliance with the duty to file supplementary returns is subject to an offense penalty of up to 100% of the amount of the unpaid tax. This penalty may be imposed if the taxable person knew or should have known that the tax levied fell below the amount that was due.

There are no specific penalties associated with the late notification or failure to notify the tax authorities of changes to a taxable person’s VAT registration details. However, the taxable person can be held liable for penalties arising from the failure to notify, e.g., noncompliance due to not having access to important mail sent to a former company address. For further details, see the subsection Changes to VAT registration details above.

Penalties for fraud. Penalties for gross negligence, intent and fraud are assessed for where a taxable person know that errors were made in the payment of VAT and did not notify the tax authorities accordingly, a penalty may be imposed up to 100% VAT that was not reported and paid as a result of the error, i.e., 25% is the typical penalty for gross negligence, 50% for intent and 100% for fraud.

Personal liability for company officers. Directors cannot, in principle, be held personally liable for errors or omissions in VAT returns. However, should VAT due by the company remain unpaid, the director(s) can be held liable if it can be proven that the fact that VAT remained unpaid is a result of maladministration by the director(s). Directors may enhance their protection against this liability by timely announcing the inability of the company to pay the VAT to the tax authorities.

Statute of limitations. The statute of limitations in the Netherlands is five years. Dutch tax authorities can review, and correct VAT returns up to five calendar years. Taxable persons can (voluntarily) correct errors in previous VAT returns also up to five calendar years. However, if the correction results in a refundable amount of VAT, the correction is treated as a VAT refund request that was filed late (i.e., outside of the standard appeal period of six weeks following the VAT payment). This status has impact on further procedural rights and obligations for the taxable person.

An active information obligation exists in the Netherlands. That means that taxable persons are legally mandated to report and correct historic errors in their VAT returns (in the past five years) as and when these are detected. Corrections must be done without delay and penalties apply to taxable persons not reporting these corrections (in time).