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With effect from 1 January 2019, the reduced VAT rate is 9% (up to and including 2018: 6%). This increase in the reduced VAT rate forms part of the 2019 Tax Plan bill. In this context, the bill contains no transitional provision. This means that, when determining the VAT rate, taxpayers should align with the standard due date.
The liability for VAT is governed by Section 13 of the Turnover Tax Act 1968, which stipulates that VAT is payable:
- if an invoice needs to be issued[1]:
- at the time of the award, or;
- by the latest date on which the invoice should have been issued[2].
except where VAT is charged on an intra-Community supply of services[3] is passed on to the recipient of that service;
- in other cases: the time at which the supply or service is provided[4].
The obligation to issue an invoice applies solely to supplies and services provided to:
- a VAT-registered business or;
- a legal person.
This means that if services are provided to a private individual, there is no obligation to issue an invoice (although this may, of course, be done on a voluntary basis).
Consequently, the time at which VAT becomes chargeable on a supply made to a private individual is not the time at which the invoice is (voluntarily) issued, but the time at which the supply of goods or services takes place[5].
Notwithstanding the foregoing, VAT is payable at the latest at the time when the payment is received (in full or in part)[6]. This relates to advance payment of the payment. In that case, VAT is already due at the time the payment is received[7].
Where the liability for VAT on an intra-Community supply of services is reversed to the customer, VAT becomes payable at the time the service is supplied (pursuant to paragraph 1(b)).
In the case of an ongoing service, VAT is payable on the last day of the financial year in which the service is provided. To the extent that these services have not yet been completed, they are deemed to have been completed in respect of the part of the service(s) provided during the financial year.
Section 26 of the Turnover Tax Act 1968 adds to the aforementioned Article 13 that, where the cash basis of accounting applies, the tax is payable at the time the payment is made.
Diagram
[1] Article 13(1)(a) of the Value Added Tax Act.
[2] Section 34g of the VAT Act: the invoice must be issued by the 15th at the lateste the day of the calendar month following the calendar month in which the supply or service was provided.
[3] Reference is made to Article 12(2) of the Value Added Tax Act. This concerns services supplied by EU businesses not established in the Netherlands to businesses established in the Netherlands.
[4] Article 13(1)(b) of the Value Added Tax Act.
[5] This note does not go into detail regarding the point in time at which a supply of goods or services is deemed to have taken place for VAT purposes.
[6] Article 13(2) of the Value Added Tax Act.
[7] Article 34g of the Value Added Tax Act stipulates that, in the case of advance payments, the invoice must always be issued before the advance payment becomes due.