Reverse Charge & “Call Off Stock” in The Netherlands
In the Netherlands, while the norm is for VAT to be levied on the provider of goods or services, there are circumstances where the responsibility to pay VAT is transferred to the recipient, known as the reverse charge mechanism.
According to the EU VAT Directive, specifically Articles 194–199b, reverse charge measures have been implemented across all EU Member States, including the Netherlands.
Read more about Reverse Charge and “Call-off stock” in The Netherlands in our comprehensive guide.
Conditions for Cross-Border Supplies Reverse Charge:
The reverse charge applies when:
- A taxable person supplies goods or services within the Netherlands.
- The supplier is neither resident nor has an establishment in the Netherlands from which the goods or services are provided.
- The goods or services are supplied to an individual or legal entity based in the Netherlands.
Implications of Reverse Charge:
Under the reverse charge system, the recipient of the goods or services is considered to have both supplied these goods or services to themselves and simultaneously received them. This creates an output tax (which they would need to pay to the tax authorities) and an equivalent input tax credit (which they can deduct from their VAT liability). Essentially, the recipient accounts for both the VAT chargeable and the VAT deductible, typically resulting in no net tax payment.
If a Dutch taxable entity exclusively makes taxable supplies, it might not experience any VAT expense, including cash flow impact, because the self-assessed VAT through the reverse charge mechanism should be completely neutralized by an equivalent input VAT deduction. Essentially, VAT that businesses owe under the reverse charge can be reclaimed within the same VAT return, negating the need for any actual VAT payment.
However, if a Dutch business also provides exempt supplies, it can only reclaim a proportion of the input VAT, aligning its position with that of receiving services from another Dutch company. In such cases, since exempt supplies do not allow for VAT deduction, the business cannot recover the full amount of input VAT, leading to a partial financial cost.
Selling in The Netherlands?
Domestic Reverse Charge
Article 12(5) of the Dutch VAT Act enforces a domestic “reverse charge” mechanism aimed at preventing tax evasion. This applies to specific domestic and cross-border transactions involving registered Dutch VAT payers. In scenarios where the domestic reverse charge applies, the supplier does not add VAT to the invoice, and the responsibility to report the VAT shifts to the registered recipient VAT payer.
The types of supplies subject to the domestic reverse charge are detailed in Articles 24b, 24ba, and 24bb of the VAT Implementing Decree. These include:
- The provision of labor in the construction sector.
- Supplies of immovable property where the seller has opted for taxation.
- VAT-exempt sales of investment gold, or sales of gold or semi-finished products with a minimum purity of 325/1000 to a business.
- Supplies of waste and scrap, as well as ancillary services.
- Transactions involving the transfer of greenhouse gas emission allowances to businesses.
- Foreclosure sales of real property.
- Supplies of telecommunications services by suppliers of such services where the place of supply is within the Netherlands.
- The provision of gas and electricity certificates to a business.
This measure ensures that the VAT on these supplies is accounted for by the recipient rather than the supplier.
Also, supplies of the following goods, if supplied in an amount equal to or greater than EUR 10.000 for each type of good:
- Cell phones
- Integrated circuits, such as microprocessors and central processing units (CPUs)
- Video game consoles
- Tablets and laptop computers
Download the Dutch VAT guide
The Netherlands – Consignment & “Call off stock”
Consignment stock refers to goods that are sent by a consignor to a warehouse and sold to a final customer through an intermediary called a consignee. Throughout this process, the consignor retains control over the stock, and the ownership is transferred to the consignee just before the stock is sold.
On the other hand, call-off stock pertains to products that a supplier transfers to a warehouse or storage facility. These products are intended for a specific customer, who can remove them from the warehouse at their convenience. Typically, the warehouse is either owned or managed by the customer.
Under certain conditions, providers from EU Member States may be exempt from registering for VAT in the Netherlands, thanks to a simplification measure. Up to January 1, 2020, various simplification strategies were in place. Post this date, one of the “Quick Fixes” introduced by Article 17a of the EU VAT Directive, transposed into Dutch law by Article 3b and corresponding articles in the Dutch VAT Act, aimed to standardize the handling of call-off stock across the EU.
Under these specific regulations, when a business transports goods to a warehouse in another EU Member State for eventual sale to a pre-identified buyer, the initial transfer is not considered a taxable transaction. Instead, the taxable event occurs at the point of the subsequent transfer of goods to the buyer. This subsequent transfer is treated as a zero-rated intra-Community supply by the entrepreneur to the buyer and an intra-Community acquisition by the buyer in the Member State of arrival. As a result of this simplification, the supplier is not required to register for VAT in the Member State where the goods end up, streamlining the process for cross-border trade within the EU.
Article 3b applies to call-off stock arrangements that meet the following requirements:
For the call-off stock simplification under the EU VAT Directive to apply, several conditions must be fulfilled:
- An entrepreneur, or their authorized legal representative, must move goods to another Member State with the intention of supplying them to another business that is authorized to take possession of those goods under an existing agreement.
- The entrepreneur who sends or transports the goods must not have a physical presence in the Member State to which the goods are sent.
- The receiving entrepreneur in the destination Member State must be registered for VAT, and the sending entrepreneur must know both their identity and their VAT identification number at the time the shipment or transportation begins.
- The sending entrepreneur is required to record the transfer in a register, enabling tax authorities to confirm the proper application of the call-off stock simplification. This record should include the identity and VAT identification number of the receiving entrepreneur assigned by the destination Member State, which must also be reported in the recapitulative statement.
- The goods must be transferred to the specified recipient within 12 months of their arrival at the consignment stock location. If the goods are not transferred within this period, they are typically deemed to have been supplied on the day following the end of the 12-month period.
Call-Off Stock Registers: A taxable person that transfers goods or receives goods under call-off stock agreements must keep a register with specific information about the transaction and its counterparties.
Dutch VAT News
The Netherlands – Import VAT
Importing goods into the Netherlands is usually a charged occurrence for VAT purposes.
According to Article 21 of the Dutch VAT Act, items usually are excluded from import VAT if their supply within the Netherlands is either VAT-exempt or zero-rated.
Import VAT is also not charged on the following items:
• Travelers’ personal belongings (subject to certain restrictions);
• Imported household effects in connection with a change of address;
• Items brought in by ambassadors or embassies; and
• Imported capital items in connection with the transfer of business operations.
Other exemptions apply to the importing of the following items:
• Small non-commercial consignments of products valued less than EUR 45 sent between natural persons. Tobacco and tobacco goods, alcohol and alcoholic beverages, perfumes, eau de toilette, tea, and coffee, according to the amounts set by the Ministry of Finance, are also exempt.
• Gold as a reserve currency for central banks.
Temporary imports may also be excluded from VAT under specific circumstances.
Importing goods dispatched or carried to another Member State are also eligible for a VAT exemption (i.e., imports followed by an intra-Community supply).
Foreign providers from third countries may use the Import One-Stop Shop Scheme (IOSS) to simplify VAT payment on low-value goods imported into the Netherlands from July 1, 2021.
Taxation of Imports
Goods imported into the Netherlands from outside the EU are liable to VAT, regardless of who imported them. In general, VAT is charged at the same rate on items imported from outside the EU as it is on commodities delivered in the Netherlands at the time of (physical) importation. In the Netherlands, only non-EU commodities, not services, are considered “imports” for VAT and customs reasons.
Under Article 1 of the Dutch VAT Act, products imported into the Netherlands from outside the EU are liable to VAT, regardless of who imported them.
Under Article 18 of the VAT Act, the following occurrences are also considered imports for VAT purposes:
• The importation of items that are not freely circulated in the EU into the Netherlands;
• The release or removal of items from a customs regime in the Netherlands; and
• The provisioning of transportation in the Netherlands concerning non-free-flowing products. Provisions, fuel, and commodities for onboard sale, for example.
Under Article 23 of the Dutch VAT Act, the importer usually is liable for any import VAT owed.
Unless the importation is free from VAT or a VAT deferment authorization is obtained, import VAT is paid to the Dutch Customs Authorities at the time of importation. Under Article 23 of the VAT Act, a VAT deferment license allows VAT reporting and payment to be postponed until the due date for the periodic VAT return for the period in which the import occurred.
Last Updated: 13/04/2022
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