Value Added Tax (VAT) In Holland
Holland uses a VAT system, similarly to other EU members. Some transactions are not subject to value-added tax, but it is commonly charged by the authorities. The regular rate, 21%, is charged with respect to almost all services and goods offered by Dutch businesses.
This rate might also apply to products imported from non-EU countries. In Holland, there is also a lower VAT rate of 6% regarding specific services and goods, e.g. medicine, food, art, medicine, books, antiques, entry to sports events, museums, theaters and zoos. The government plans to increase the rate to 9% in 2019. Thus making it even more advantageous to start a business in Holland.
VAT for international entrepreneurs: when your company is established in a foreign country, but you are also operating in Holland, you need to conform to the national regulations. If you are offering products or services in Holland, in most cases you need to cover VAT there. Still, VAT is often charged in reverse to the individual receiving the product or service, resulting in 0% rate.
Reverse-charging is an option if your clients are legal entities or entrepreneurs established in Holland. Then you can omit the VAT from the invoice and insert reverse-charged instead. Otherwise, you need to pay the tax in Holland. Starting a business in Holland will allow your business to make full advantage of the Dutch VAT regulations.
30% tax reimbursement ruling: international employees hired in the Netherlands can make use of a tax exemption called “the 30 percent reimbursement ruling”. If you meet certain conditions, the employer will transfer to you 30% of your wages free of tax. This allowance is meant to compensate the additional expenses of employees who work outside their home countries.
Eligibility conditions: in order to qualify for reimbursement, candidates have to meet the following requirements:
• the employer is registered at the Tax Office in the Netherlands and covers payroll tax;
• there is a written agreement between the employee and the employer that the reimbursement ruling applies;
• the employee is either transferred or recruited abroad;
• upon hiring, the employee had resided more than 150 kilometres away from the border of the Netherlands for at least 18 months out of the past two years;
• the yearly salary of the employee is equal to or exceeding € 37 000;
• the employee has qualifications that are scarce on the Dutch labour market.
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