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How is VAT charged when a private individual in the Netherlands buys goods to take home? What risks does the seller face? There is a special refund scheme for charitable organisations.
Output
Export refers to the movement of goods outside the European Union (EU). In principle, such goods are not subject to VAT. After all, VAT is intended to be levied on the consumption of goods and services, and exported goods are not consumed within the EU.
When a entrepreneur Where goods are supplied and taken out of the EU, that supply is subject to VAT. As the rate is 0%, no VAT is charged. Naturally, the trader is entitled to deduct the VAT charged to them. The goods thus leave the EU VAT-free.
Private individual
If a private individual in the Netherlands purchases goods and takes them outside the EU, VAT is payable on those goods. This can be resolved by allowing the trader supplying the goods to the private individual to apply the 0% rate.
This is permitted provided that the natural person to whom the goods are supplied:
- lives outside the EU (as evidenced by a valid identity document) or will be moving to live outside the EU within the period specified below;
- you take the goods with you in your personal luggage when leaving the Netherlands, to a country outside the EU, no later than the end of the third month following the month of purchase;
- the total value of the goods is at least €50 (including VAT);
- Proof of actual export is provided by an invoice (or a copy thereof) endorsed by customs, or by a document of equivalent value.
No refund
There is no scheme in the Netherlands under which private individuals can claim a VAT refund when leaving the country (for example, at airport customs).
Risk
However, applying the 0% rate entails a considerable risk for Dutch businesses. After all, the burden of proof that the 0% rate is being applied correctly rests with the supplying business. That business must demonstrate, to the satisfaction of the tax authorities, that the conditions mentioned above have been met.
The Tax and Customs Administration sets high standards for this burden of proof. If it transpires that not all the conditions have been met, the Tax and Customs Administration will impose the (21% or 6%) VAT. And there is a strong likelihood that a substantial fine will also be imposed.
To avoid this risk, business owners would be well advised to take the following approach:
- charge Dutch VAT (21% or 6%) on the purchase of the goods and ensure that the customer pays it;
- once the customer has provided proof of the actual export of the goods (the documents stamped by customs), credit the VAT and refund it to the customer.
Within the EU
The rules described above apply only to private individuals residing outside the EU. Where goods are supplied to private individuals residing within the EU, Dutch VAT must be charged. Within the EU, the 0% rate applies only where the customer is a VAT-registered business. In such cases, the customer must declare VAT in their country of establishment in connection with the intra-Community acquisition of the goods.
Distance sales
Supplies of goods to private individuals resident in the EU may qualify as distance sales. This is the case where the transport or dispatch of the goods is carried out by, or on behalf of, the trader supplying the goods.
Where a threshold applicable to an individual EU Member State is exceeded, distance sales are taxed in the country where the private customer resides.
A few of these thresholds (you can find the current thresholds on the EU website):
- Germany € 000
- Belgium € 000
- Luxembourg € 000
Dutch traders engaged in distance selling must register with the relevant EU Member State if they exceed the threshold, in order to submit a VAT return and pay VAT. The administrative rules of that Member State apply in this regard.
Charity
There is, however, a scheme for the refund of VAT to organisations that export unused goods for the purposes of their humanitarian, charitable or educational work outside the EU.
This scheme applies to legal entities; it does not apply to natural persons. Generally speaking, this will involve foundations or bodies governed by public law.
When applying for a VAT refund, the organisation must submit:
- documents showing the amount of VAT paid;
- the export certificate, which has been signed off by customs (the form for this certificate can be obtained from the Tax and Customs Administration).
The purpose of this note is to outline a scheme. For the sake of readability, matters have therefore been simplified. VWG is therefore not liable for the consequences of actions taken or not taken as a result of this memorandum.