Dutch |
Print2 June 2009
On 25 March 2009, the Dutch Ministry of Finance has published a bill to implement amendments of the European VAT Directive regarding the place of supply of services and the new rules for the refund of foreign VAT. These new rules will be applicable as from 1 January 2010.
Place of supply of services: new main rule
Under the current VAT rules, Dutch VAT is to be charged in respect of cross border services supplied to VAT entrepreneurs in another EU Member State (so called B2B supplies), unless an exception applies.
As from 1 January 2010, this so-called 'main rule' for determining the place of supply of services between businesses changes: as form 2010 the main rule is that VAT on services will become due in the country where the recipient of the services is established. As a consequence thereof, entrepreneurs from that date no longer will have to charge VAT on cross-border B2B supplies of services but instead VAT is to be reverse charged in the country of the recipient of those services.
Exceptions to this new rule include amongst others services for the buyer’s personal use, real estate services, scientific activities, renting out means of transport, and exhibitions.
Refund of foreign VAT: new rules
Nowadays, refund claims of foreign VAT paid need to be filed directly with the foreign tax authorities based on the ‘8th Directive refund procedure’, which is an extensive and time consuming procedure. From 2010 onwards entrepreneurs can electronically reclaim the foreign VAT paid through the Dutch tax authorities. Moreover, late refund decisions by foreign tax authorities may result in interest payments by the foreign tax authorities to the entrepreneur who requested for a refund of the foreign VAT paid.
The changed regime for the supply of services is a small change, which can however have big consequences for the international practice. These amendments should also be looked at in the light of the measures announced by the Dutch Government to limit the administrative burden for entrepreneurs. Though the amendments in basis create a simplification of the VAT rules to be applied, an additional administrative burden can be expected as well. From 2010, every entrepreneur that provides cross-border B2B supplies of services whereby VAT is to be reverse charged in the country of the recipient of those services, is obliged to periodically submit a list of these services and the recipients (including their VAT registration numbers) to the tax authorities. At the moment this is only mandatory for the intra-Community supply of goods. In addition, administrative systems, including billing systems, may have to be adjusted as well.
If you require more information on this subject, or if you wish concrete advice, please call Edwin Veele at our office at the number +31 - 10-2010466 or contact us via e-mail.