NETHERLANDS: COVID-19 VAT IMPLICATIONS

Apr 1, 2020 | COVID-19

NETHERLANDS – Update 27th May

Dutch VAT assessments due to Corona

The Dutch Tax Administration (DTA) has announced that in the next days some businesses will receive an assessment for VAT. Due to the Corona crisis it seems there are more assessments issued.

If businesses have not yet requested the special payment extension, this can still be done directly after receiving the assessment and for a period of 3 months. When requested the DTA shall annul the payment fines which are automatically imposed, these do not need to be appealed or paid.

 

Source credit – pincvision

 

NETHERLANDS – Update 25th May

Extension of the COVID-19 measures till Sept 1, 2020

It concerns:

  • the emergency payment deferral regime
  • VAT exemption for supply of personnel to care for and nurse persons in qualifying institutions
  • the supply of free medical equipment to the qualifying institutions

 

Source Credit – rijksoverheid

 

NETHERLANDS – Update 19th May

Temporary VAT zero rate on supply of protective face masks from 25 May to 1 September 2020

The measure is taken for the supply of protective face masks, obligatory while making use of public transport in connection with protection from infection with COVID-19.

Background

The State Secretary of Finance explains in a letter that the supply of face masks is currently subject to the general VAT rate of 21%. The temporary VAT zero rate will apply to all supplies of face masks. Not only face masks to be used in public transport, but also medical grade face masks, regardless to whom they are supplied.

The reason for the measure is that as of 1 June 2020 it will be mandatory to wear a non-medical face mask in public transport. As of that date more people are expected to make use of buses, trains and trams, whereas it will not always be possible to keep 1.5 meters distance from each other. The goal of the measure is to reduce the price of face masks for end users.

This temporary measure will not affect the input VAT recovery of the suppliers of the face masks. For this purpose the VAT zero rate instead of a VAT exemption (without input VAT credit) will be applicable.

Import of medical relief products and equipment

Currently, a conditional exemption from import duties (customs duties) on the import of personal protective equipment is in place. This exemption applies when the protective equipment is imported by, for example, governmental institutions, philanthropic institutions, hospitals, health care institutions and qualified health carers that have received a permit from Customs. This also applies to a private organization or a purchasing consortium that imports on behalf of the aforementioned institutions.

Other EU Member States, meanwhile, temporarily exempt face masks and other products from import VAT. However, this is currently not the case in the Netherlands. It is unclear if the temporary VAT zero rate will also apply to imports from 25 May to 1 September.

 

Source Credit – Deloitte

 

NETHERLANDS – Update 11th May

Bankruptcy within a VAT group

 Companies within a VAT group are each individually liable for the total VAT debt. Usually this is not experienced as a problem. But in the current corona crisis, this can have unwanted consequences. For example, if there is a bankruptcy of an operating company belonging to the fiscal unity. The usual liability of your holding company for the VAT on the turnover of the operating company is then extended to include the VAT in unpaid invoices from your suppliers of the operating company. It may be wise to consider whether you can terminate the VAT fiscal unity between your holding company and the operating company.

 

Source Credit – flynth.nl

 

NETHERLANDS – Update 5th May

Outsourcing healthcare workers & Medical supplies and equipment supplied free of charge

On 24 April 2020, the Dutch State Secretary of Finance published a decree containing further tax relief measures in response to COVID-19. The decree follows consultation with various interest groups and includes VAT-related measures. Upon publication, the measures became final and generally are retroactive to 12 March 2020.

Outsourcing healthcare workers 

Due to COVID-19, healthcare providers and institutions outsource among each other healthcare workers. This outsourcing could result in VAT being charged but not deductible (in full or in part). The decree introduces a measure that allows outsourcing of healthcare workers to be exempt from VAT, subject to the following three conditions:

  • The healthcare worker must be hired by a healthcare provider or institution that qualifies for the VAT exemption on medical services;
  • The outsourcer must state on the invoices that the VAT exemption on medical services is being used and keep in its records the supporting documentation; and
  • If the outsourcer requests reimbursement of its healthcare workers’ costs, the outsourcer may charge only the gross payroll costs (with any markup capped at 5% of such costs), thus prohibiting the outsourcer from making a profit on the transaction.

For purposes of this measure, the identity of the outsourcer is irrelevant. Furthermore, the measure will not affect the outsourcer’s recovery of input tax. This measure will be effective retroactively as from 16 March 2020 and apply until 16 June 2020.

Medical supplies and equipment supplied free of charge 

VAT will not be required to be charged on medical supplies and equipment supplied free of charge to healthcare providers and institutions and will not affect the supplier’s recovery of input VAT, subject to the following four conditions:

  • The goods supplied must be on the World Customs Organization’s classification reference list for COVID-19;
  • The supplier must include the cost of the goods in its general overhead costs;
  • The recovery of input VAT on these general overhead costs must be determined based on the VAT taxable turnover without regard to the goods provided free of charge; and
  • The supplier must issue an invoice and state on the invoice that the VAT exemption on the free supply of medical supplies and equipment is being used and keep in its records the supporting documentation.

Reduced VAT rate for online fitness classes 

The reduced 9% VAT rate that currently applies to the use of sports facilities also will apply to online fitness classes as from 16 March 2020 until the government’s mandatory restrictions on free movement are lifted.

 

Source Credit – Deloitte

 

NETHERLANDS – Update 23rd April

VAT measures outsourcing healthcare personnel and provide medical aids

 Unofficial translation

Outsourcing healthcare personnel and the presence of sufficient medical devices and equipment is necessary during the corona crisis to provide the necessary care. During this period, more healthcare personnel are therefore hired and hired. In addition, entrepreneurs provide free medical devices and equipment. To prevent this leading to additional administrative or financial burdens, the Cabinet has introduced two temporary VAT measures.

These temporary VAT measures in healthcare are part of more additional measures that are laid down in a policy decision. These two specific VAT measures are applicable retroactively (from March 16, 2020 to June 16, 2020).

 

Source Credit – BDO NL

 

NETHERLANDS 

Policy decision on corona crisis emergency measures

On 15 April 2020, the State Secretary sent a draft decision containing tax concessions relating to the corona crisis to the House of Representatives. Following consultations with various interest groups, the decision also includes new approvals on top of the previously announced crisis measures. A brief overview is provided below. The decision will have retroactive effect to 12 March 2020 after publication, save a few exceptions.

Corporate income tax and income tax

Time limits of tax facilities extended

The decision provides for a relaxation of the time limits within which certain legal acts should be performed to qualify for retroactive application of the tax facilities for tax-neutral conversion, transfer of a business under Article 14c Dutch CITA (geruisloze terugkeer), company mergers, legal mergers, and demergers. The approval means that these periods will be extended by three months if they would expire during the period from 1 March 2020 to 31 May 2020.

VAT

VAT consequences of hiring in and supplying staff

The combat against COVID-19 has forced healthcare institutions and healthcare providers to mutually interchange an extraordinary number of healthcare staff. Hiring in healthcare staff may lead to VAT not (or not fully) being deducted if VAT must be charged. The State Secretary for Finance has introduced a mitigating measure in which he announces that supplying healthcare staff continues to be VAT exempted, subject to three conditions:

  • the healthcare staff must be hired in by healthcare institutions (e.g., hospitals, nursing homes, elderly care centres, or mental institutions) that apply the medical exemption;
  • the supplier must state on its invoices that this approval is being used and its administrative records must include the details involved;
  • if a compensation is requested for the supply of staff, this must be restricted to healthcare staff members’ gross salary costs, possibly increased by an administrative fee – capped at 5%. The supplier is not permitted to seek or make a profit from the supply.

The supplier’s identity is irrelevant. Furthermore,the measure will not affect this supplier’s deduction of input tax. The measure has retroactive effect to 16 March 2020 and applies until 16 June 2020.

VAT consequences of providing medical supplies and equipment free of charge

Healthcare institutions, healthcare facilities and general practitioners currently receive many medical supplies and equipment free of charge (provided for no consideration – e.g., test kits, protective equipment, thermometers, disinfectants, respiratory equipment). Free supplies would usually trigger a limitation of deduction of input tax with the providing party, or VAT on the items supplied free of charge. The State Secretary for Finance has announced a mitigating measure, according to which no VAT needs to be charged on the free supplies of medical devices and equipment. In addition, these free supplies do not affect the right of deduction. However, four conditions must be met:

  • the approval solely applies to goods listed in the Annex (in Dutch) ‘Bijlage Gepubliceerde lijst van de Wereld Douaneorganisatie; indelingen van medische voorzieningen in verband met uitbraak Covid-19’. This list is largely similar to the ‘updated classification reference list to the medical supplies imported to fight against the spread of COVID-19’ which can be found on the website of the World Customs Organization;
  • suppliers will include the cost of the goods in their general costs;
  • the right to deduct VAT for these general expenses is determined based on entrepreneurs’ total revenues, excluding the free provision of the goods;
  • suppliers must state on their invoices that this approval is being used and they must include the details involved in their administrative records. Thus, it is required to issue an invoice for the free goods.
Reduced VAT rate for offering online gym sessions

With the gyms being locked down, the entrepreneurs involved currently often offer adapted online gym sessions. As these are special circumstances, the State Secretary for Finance approves that the reduced 9% VAT rate applicable to providing sports facilities for the active exercise of sports, likewise applies to gym sessions offered provided online. This approval can be applied retroactively to 16 March 2020 and applies until the compulsory lockdown is lifted.

Temporary reduction of interest on tax and interest on overdue tax

Tax assessments not paid on time are usually subject to a 4% interest on overdue tax for the period in which the tax debtor is in default. With retroactive effect to 23 March 2020 though, the interest on overdue tax to be charged has temporarily been reduced to 0.01% for all tax debts. For the time being, this approval is valid for a three-month period.

The decision stipulates that this interest reduction only applies to interest on overdue tax to be paid, not to interest to be reimbursed by the tax collector. The interest reduction does initially affect the amount of the early payment discount because of advance payment of a provisional income tax or corporate income tax assessment. However, the State Secretary indicates that if an objection has been filed a payment discount based on a 4% interest rate may still be requested.

 

Source Credit – Deliotte

 

NETHERLANDS – Update 17th April

VAT filing deadlines remain in place but if a business requires deferral of the payment due, an application can be made to the tax authority. Longer extensions can be granted with supporting evidence. The application can only be made once an assessment has been issued for the non-payment of the VAT due.

 

Source Credit – Accordance VAT

NETHERLANDS – Update 16th April

Hiring of care personnel outside VAT, VAT free donations of medical supplies and equipment, Reduced rate on sports lessons offered online

Summary: Donation of goods: No VAT is due on the provision for free of medical devices to health care institutions, care institutions and general practitioners. In addition this provision has no effect on the deduction of input VAT of the contributor.

 

Source Credit – Dutch Ministry of Finance

NETHERLANDS – Update 15th April

Lending healthcare staff temporarily outside scope of VAT

Due to the corona crisis, more than usual healthcare personnel are hired and hired. Not only by healthcare institutions, healthcare institutions and healthcare providers, but also by other companies such as employment agencies. Lending staff is normally a VAT-taxed service. At this time, the government considers it undesirable that the VAT rules for the lending of personnel lead to additional financial or administrative burdens. That is why a temporary measure has been taken in a policy decision. For the period from March 16, 2020 to June 16, 2020 (3 months), it has been approved that the lending of health personnel is excluded from the levy of VAT.

Furthermore, entrepreneurs who provide medical devices free of charge to healthcare institutions, care institutions and general practitioners do not have to pay VAT on this and have no consequences for the deduction of VAT. The State Secretary of Finance approved this in a policy decision. The entrepreneur must then state on the invoice that this approval is used and he must record the data relating to the application of the approval in the administration.

 

Source Credit – VNO-NCW

NETHERLANDS – Update 15th April

Suspension of sending invoices does not lead to a postponement of VAT

Suspending sending invoices for, for example, rented properties or subscriptions does not lead to a suspension of performance for VAT. Therefore VAT has still to be paid, even if the entrepreneur has not yet send the invoice. This is in accordance with the judgement of the Court. The invoice must be issued no later than the 15th day of the month following the month in which the performance has been performed. At that time, VAT has to be paid. Do not postpone sending invoices, but invoice on time. However, the customer can be granted deferment of payment.

 

Source Credit – Van Vilsteren (BTW Advies)

NETHERLANDS – Update 14th April

VAT consequences for issuing vouchers due to COVID-19

Gyms and catering establishments have now been closed for some time and many events have been cancelled due to the drastic measures implemented by the government. We have recently seen a new trend emerging: gyms, event agencies and travel organisations are offering their customers vouchers to compensate for their subscription and/or cancelled events/trips. We will be providing a summary of the VAT consequences associated with issuing such vouchers in this article.

Voucher definition

A voucher is a means (instrument) which can be redeemed for particular goods or services, requiring no additional payment. The voucher states with whom and for which goods or services it can be redeemed and the conditions which need to be met for using the voucher.
We distinguish between single purpose vouchers and multi purpose vouchers where the VAT is concerned. If details are available regarding which good and/or service is going to be supplied and which VAT rate will apply at the time of issuing the voucher, then this is a single purpose voucher. If this is not clear (for example, if the voucher can be redeemed for various different goods and/or services, either or not taxed at different VAT rates), then we refer to this as a multi purpose voucher. VAT will be owed at the time a single purpose voucher is issued, whilst for multi purpose vouchers VAT will not be due until the voucher is exchanged and/or redeemed.

VAT consequences for issuing vouchers due to COVID-19

The aforementioned means that if the consumer is issued with a single purpose voucher – to compensate for the cancelled supply due to the coronavirus – the original VAT due will remain in force. The voucher will serve to replace the ‘cancelled service’.
However, if the consumer receives a multi purpose voucher to compensate for the cancelled service, no VAT will be due at the time of issuing the voucher, but only when exchanging it. In such cases the VAT originally owed and (possibly) paid to the Tax Authorities may be reclaimed.

Discount coupons

Free coupons can also be issued by entrepreneurs (by way of compensation), which the consumer will need to supplement. Such coupons do not qualify as vouchers for VAT purposes, but as discount coupons. This generally means that, when redeeming the discount coupon, VAT must also be paid on any additional payment.

 

Source Credit – Bakertilly

NETHERLANDS – Update 10th April

Offering online services during the corona crisis; VAT consequences?

In these times of the corona crisis, entrepreneurs (out of necessity) increasingly offer their services online. Consider, for example, a course on location that can no longer take place, but is now given online. Certainly in international relationships this can have consequences for turnover tax. In the example of the course, distance education is now offered. When this service qualifies as a digital service and the customers reside abroad, this has consequences for which country VAT is due.

 

Source Credit – BDO NL

NETHERLANDS – Update 8th April

COVID-19 VAT 3-month payment delay

The below VAT measures have been extend to other sectors, including: gambling; insurance premium tax; accommodation taxes; environmental taxes; excise taxes.

23 March. The Dutch tax office has confirmed that it will not be enforcing the non-EU importer of record rules yet in light of the coronavirus epidemic.

The Dutch tax agency had previously published details of a range of Value Added Tax easements for businesses during the coronavirus epidemic. Other taxes will have similar easements.

Dutch VAT easements include:

  • Businesses may apply for delayed VAT payments for three months if they can show hardship as a result of the crisis. A longer period may be requested, but this will require additional supporting information.
  • A completed application will trigger an automatic pause on VAT liabilities.
  • The tax office may cancel any penalties or interest for any late payments. This is done as soon as the application is received. 
  • Late penalty interest will be reduced from 4% to 0.01% from 1 June if found delay not related to crisis.
  • Open VAT assessments will be amended if it appears VAT should be less due to the pandemic.
  • Extra VAT relief on customer bad debts will be granted if related to crisis.
  • Option for businesses with regular VAT credits on quarterly VAT returns to change to monthly returns for better cashflow. 

Businesses may also bring forward 2020 VAT reclaims from other EU member states via 8th Directive claims.

 

Source credit – Richard Asquith (Avalara)

NETHERLANDS – Update 31st March

  • Immediate deferral of payment of tax upon request up to three months. For deferment requests of longer than three months, additional information is required for the assessment of whether the financial problems were mainly caused by the corona crisis. A statement from a third expert may also be required. This information and possibly a declaration can be sent at a later stage.
  • Adjustment of preliminary tax assessments resulting in a refund or less CIT payable.
  • Tax interest will be decreased to 0,01% (instead of 4%, or in some cases even 8%).
  • Municipalities may decide to provide deferral of payment for (preliminary) tourist tax assessments to support entrepreneurs offering overnight stays (hotels and other leisure businesses).

 Source Link here 

NETHERLANDS – Update 25th March

  • General VAT payment extension can be requested for period of 3 months.

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