In this blog we will elaborate on Dutch VAT, the two types of VAT numbers for foreign entrepreneurs, their main differences and the process of applying for a VAT number.
What are the two types of VAT numbers?
A company that is registered in the Netherlands can either obtain a resident or a non-resident VAT number.
1. The resident VAT number
The resident VAT number requires a company to fulfill several substance requirements before it can be considered a ‘resident’ company.
At this moment, the tax authorities focus on the office, mainly because Dutch BV does not show any other substance in the Netherlands. If you can provide other evidence to show that the company does have an actual business (or have facilities to run an actual business) in the Netherlands, the VAT still can be activated. Having a virtual office is legal in the Netherlands.
There might be two options for you:
- Renting a physical office (and/or hire an employee to work there) to create a substance on the permanent establishment.
- Provide documents to show that he has suppliers or clients in the Netherlands, to create substance on business activities. Some contracts or invoices would be very helpful. An "outgoing" invoice to a Dutch customer (individual or legal entity) would be preferable because it is mandatory to have a VAT number if a company provides services in the Netherlands.
Aside from the practical matter, there is also the legal matter. The application of a VAT number means, that there should be a 'permanent establishment' from which the client operates. In case such permanent establishment is not present, the tax authorities can reject/revoke a VAT number, and they can suggest applying for a non-resident VAT number.
2. The non-resident VAT number
Non-resident companies doing business in the Netherlands, may have to file a VAT return (turnover tax, BTW) in the Netherlands. If so, they need to register for VAT with the Dutch Tax and Customs Administration.
What are the main differences between the two VAT numbers?
The most important difference from the resident VAT number is that with the non-resident VAT number, you cannot apply for the Article 23 permit without a tax representative.
The article 23 permit allows you to benefit from the reverse charge mechanism, which means that you will be able to postpone the payment of VAT from the moment of import of goods. The VAT is instead then paid after the VAT return for the related quarter.
Consequently, you can decide to
A) start with the resident number, B) declined for resident number proceed with the non-resident, C) start with non-resident immediately due to urgency.
How do I apply for a VAT Number?
How do I apply for a resident VAT number?
Before applying for the resident VAT number, one must first consider whether all the substance requirements are satisfied. INCO can assist you by going through a checklist and discuss with you your future plans and determine how and at what point your business can get the resident VAT number. The moment when all the conditions are achieved, INCO can send out the request to the Tax Authority and have progress followed by a dedicated company officer.
How do I apply for a non-resident VAT number?
The non-resident application is the fastest procedure as it requires much less investigation by the Tax Authority.
In case onee or more of the following questions apply to you, you qualify for a non-resident VAT number.
Do you sell goods to private individuals in the Netherlands?
Do you sell goods to individuals from other EU countries from the Netherlands?
Do you sell goods to other foreign entrepreneurs in the Netherlands?
Do you sell goods to entrepreneurs from other EU countries
(intra-Community supplies) from the Netherlands?
Do you bring your own goods from the Netherlands to another EU country?
Do you sell goods to customers outside the EU from the Netherlands?
Do you have intra-Community acquisitions (ICA) in the Netherlands?
Did you receive any invoices with Dutch VAT that has been reserve-charged to you?
Do you have other deliveries in the Netherlands subject to VAT?
Do you charge VAT for services provided in the Netherland
To apply, you will have to send us the following:
- The filled in application form. It is important to answer the questions correctly and truthfully.
- A copy of a valid ID/Passport
- Proof of the deed of incorporation
- Outgoing invoices or contracts with preferably Dutch customers. You may also attach of some of your EU customers. This part is optional but much recommended to proof that you need a VAT number.
It’s important to realize that no VAT number will be granted if the BV is not actually located in the Netherlands and there are no business activities in the Netherlands. There is extra attention from the tax authorities in case of a virtual address.
Please contact us if you would like to get more information with regards to VAT application for your specific situation.
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