Reverse charge VAT in the Netherlands

When is VAT reverse-charged on your invoice?

You reverse-charge VAT on services to EU businesses and on listed domestic supplies. You charge no VAT yourself. Your customer then reports that VAT in their own VAT return. The Dutch term for this is btw verleggen. The rules behind it are the verleggingsregeling.

This page is about services. Two subjects stay outside it. Selling to private customers in other EU countries follows the Union scheme. Our guide to the Union scheme (OSS) covers that route. Reporting your EU supplies afterwards is a separate filing, covered in our guide to the ICP declaration. New to Dutch VAT altogether? Start with our guide to how VAT works.

Take Emeka, a freelance translator in Arnhem. A software company in Belgium has hired him for a €6,000 project. He has to decide today whether that invoice carries Dutch VAT or none at all. We follow his invoice through this guide.

What does your customer's status change?

Your customer's status and the nature of your supply decide whether you charge VAT. The reverse charge is built for business customers. A business in another EU country accounts for the VAT at home, so your invoice carries none. A private customer abroad is a different case entirely and belongs with the Union scheme. With a Dutch business, the supply must also be one of the listed domestic supplies.

The Belastingdienst must be able to establish who your customer is.² A valid VAT identification number does that. If that stays unclear, you have applied the reverse charge wrongly.² So confirm the number before the invoice goes out, not after. Many businesses first validate it against the European VIES database.⁵

For Emeka, the Belgian company is a VAT-registered business. His invoice therefore includes no Dutch VAT. The table below sets the four situations side by side.

Does the reverse charge also apply inside the Netherlands?

Yes. Several domestic supplies are reverse-charged between two Dutch businesses.³ Subcontracting and hiring out staff is the largest group. It mainly happens in construction, shipbuilding, cleaning and landscaping.³ Alongside it sit waste and scrap.³ Immovable property, forced sales by a creditor and sales of gold fall under it too.³ The same holds for gas and electricity certificates, transfers of emission rights and telecommunication services between providers in the Netherlands.³

The subcontracting rule is narrower than it looks.⁴ It covers physical work on immovable property or on ships: building, demolition, installation, maintenance, repair and cleaning. The subcontractor invoices the main contractor without VAT. The main contractor accounts for it.

One case falls outside this rule and comes under another. Is the subcontractor a foreign business without a fixed establishment in the Netherlands for VAT purposes? That means no real place of business here. Then the reverse-charge regime for supplies by foreign entrepreneurs applies instead.⁴ This also covers a foreign business with no Dutch establishment supplying services here. Your Dutch customer then reverse-charges the VAT and reports it in box 4.

Not every job a subcontractor takes on falls under the rule.

What does a reverse-charged invoice show?

A reverse-charged invoice shows no VAT amount, only the words “btw verlegd”.² The amount excluding VAT stays on it as normal. What changes is the VAT line, not the rest of the document.

Everything else on the invoice stays the same. The mandatory elements apply here like on any other invoice.¹ So do the legal-name rule, the PO box rule and the consecutive numbering.¹ Our page on invoicing customers in the Netherlands sets all of them out in full.

Extra requirements apply as soon as you do business abroad.¹ That is exactly where the reverse charge lives. On one point the Belastingdienst is exact.

Where does reverse-charged VAT go in your VAT return?

You report reverse-charged turnover in box 1e or 3b of your VAT return.² What you reverse-charge to someone else is turnover, so you report the amount without any VAT beside it. What is reverse-charged to you works differently. There you enter the amount and the VAT.² You deduct that same VAT in the same return where the goods or services serve taxed business activities.² The net effect of that pair is nil.

The boxes differ by direction and by where your customer sits. Box 3c covers goods you install or assemble at a customer's EU site. All five appear in the table below.

What does a reverse-charge invoice look like?

Emeka's invoice shows no VAT, the words “btw verlegd” and a Belgian VAT number. He confirms the number first, so the Belgian company can be identified without doubt. He states the €6,000 fee excluding VAT. Beside it he shows the Dutch rate, 21%². That is the rate that would have applied without the reverse charge. He adds his VAT identification number and his KVK number, the Chamber of Commerce number. He also lists the issue date, a fresh sequential number and the delivery date.

Then the return. Emeka reports €6,000 of turnover in box 3b, because his customer is a business in another EU country. No VAT amount goes beside it. His Belgian customer declares the VAT in Belgium and deducts it there in the same return. That is the whole mechanism. The two sides balance.

His obligation does not quite end there. Reverse-charging an intra-EU supply to a business also triggers an ICP declaration, a separate filing with its own periods. Our guide to the ICP declaration walks through it.

What happens when you get the reverse charge wrong?

The VAT comes back to you, in either direction.² Apply the reverse charge when it does not hold and the Belastingdienst can assess that VAT on you, the supplier. Leave it off when it should have applied and you have issued an invoice charging VAT that never belonged there. You must still declare and pay that VAT.

Your customer pays for it too. When an invoice charges VAT that should have been reverse-charged, the customer may not deduct that VAT as input tax. They have to ask you for a corrected invoice. The relationship takes the strain long before the Belastingdienst does.

That is why the responsibility sits with the supplier.² You establish in advance that the regime genuinely applies, rather than assuming it from the customer's country. It turns on the status of your customer and on the nature of what you supply. Neither of those is visible from an order confirmation alone.

What does this mean for your next invoice?

Three questions settle almost every invoice: who, what and where. Does your customer hold a valid VAT identification number? What are you supplying and does it belong to one of the listed groups? Where is your customer established? Answer those three and the invoice wording and the return box follow on their own. Emeka's invoice worked because he confirmed all three before he sent it.

One habit keeps it clean afterwards. Run your reverse-charged turnover against your VAT return boxes each period. Box 1e, 3b and 3c should match what you actually invoiced.

The rest is administration. It is the part we take over most often. Our tax return for the self-employed covers the VAT work alongside your income tax return.

Our advisor sees one question come back again and again.