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Abolition of the reduced VAT rate in the Netherlands

In the May 2015 issue of the IVA Newsletter, an update was given on the abolition of the reduced VAT rate (6% instead of 21%) for renovation and repair of (private) dwellings, which are older than two years. As from 1 July 2015, the reduced VAT rate will solely apply to the painting and plastering of and the installing of energy-saving materials in dwellings (older than two years). Despite a recent message from the Dutch Tax Authorities, announcing the abolition of the reduced VAT rate for renovation et cetera of dwellings, turmoil comes up. Several associations, serving the interests of small and medium-sized construction companies, have submitted a petition to the Dutch parliament. 15.000 Persons have signed this document, aiming on the prolongation of this specific reduced VAT rate. In the July 2015 issue, IVA members will be informed whether this rate, stimulating the national construction business, is still in force or not.

The Dutch Tax Authorities announced that they will send official letters to entrepreneurs, holding a Dutch VAT identification number but have submitted so-called “nil returns” or haven’t paid VAT for more than one year. In this letter is stated the VAT identification number will be withdrawn, unless the entrepreneur informs the Dutch Tax Authorities he/she still performs supplies in the Netherlands falling under an exemption or a special schemes. This announcement by the authorities will definitely affect non-resident entrepreneurs, registered with the Dutch Tax and Customs Administration/Limburg/Department of International Issues in Heerlen. Once the VAT identification number has been revoked, the entrepreneur only has to inform the authorities it will perform taxable supplies in the Netherlands in the future, in order to re-activate the number easily. Furthermore, the elimination of the Dutch VAT identification number will be communicated to the Dutch Chamber of Commerce and may trigger the cancellation of the issued so-called “Article 23-permit” (shifting the payment of VAT on importation to the periodical VAT return) as well.


Gijs Otten

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Disclaimer:  The information contained in the present page is general and does not constitute legal advice. Before taking any decision or action on the above information you should take the appropriate professional advice.