Further to our July announcement, the Dutch government’s plan to increase the reduced rate of VAT from 6% to 9%, was included amongst other VAT proposals in the draft 2019 budget, published on 18th September. Over the next few months, these proposals will be deliberated by the Dutch Parliament.
The following measures are generally expected to take effect as of 1st January 2019:
- Increasing the reduced VAT rate from 6% to 9%. The reduced VAT rate applies to specified goods and services including food, medicines, books, accommodation and granting entry to cinemas, theatres, concerts and museums.
- Broadening the scope of the VAT exemption for sporting activities. This is currently restricted to sports services provided to sports association members. The change is likely to make the exemption available to services supplied to non-members and the use of sports facilities by non-profit organisations.
- Implementation of EU Directive 2017/2455, aiming to simplify VAT compliance obligations for online businesses, through new EU-wide place of supply rules for cross-border B2C supplies of electronic services. As the general rule stands, the place of supply is where the customer is established or usually resides. The legislative changes provide for specified exceptions to this general rule: such as, if the total value of cross-border B2C supplies does not exceed the annual threshold of EUR 10,000, these supplies will be subject to VAT in the Member State of the supplier. Moreover, non-EU established businesses with an EU VAT registration may use the Mini One Stop Shop (MOSS).
- As of 1st January 2020, replacing the current small businesses VAT scheme with the small enterprise exemption regime, provided for in the EU VAT Directive. Resident businesses with an annual turnover not exceeding EUR 20,000 will be able to choose to apply the proposed scheme under which they may neither charge nor recover VAT. They will also be exempted from filing VAT returns and other associated compliance obligations.
If you believe you may be affected by the above developments, please do get in touch to discuss how we can help you.