What is VAT (btw) in the Netherlands?

What is VAT (btw)?

VAT is a tax on your turnover, not on your profit.¹ You add it to the price of what you sell. Your customer pays it and you hand it on to the Belastingdienst, the Dutch tax office.

In Dutch you call it btw, short for belasting over de toegevoegde waarde. The Belastingdienst also uses the word omzetbelasting, which simply means turnover tax. Both words point at the same tax.

The VAT you pay on your own business costs usually comes back to you.¹ So what you pay to the Belastingdienst is the difference between the two amounts.

This page covers the basics: who charges VAT, which rate applies and how the return works. It does not cover income tax on your profit. That is a separate return with rules of its own. We come back to the difference lower down.

Meet Nour. She registered a one-person business in the Netherlands last year. Most of her customers are Dutch and some sit abroad. Her figures run through this page as our example.

Who has to charge VAT in the Netherlands?

Almost every entrepreneur in the Netherlands charges VAT.⁵ You register your business with KVK (the Dutch Chamber of Commerce) first. The Belastingdienst then decides whether you count as an entrepreneur for VAT and informs you after registration.⁵

Your legal form makes no difference here. The same test applies to a bv (the Dutch private limited company), a foundation and a one-person business.⁵ What matters is that you work independently and earn income from it.¹

You then receive two numbers and they do different jobs. Your btw-id (VAT identification number) belongs on every invoice you send. Your omzetbelastingnummer (turnover tax number) is the number you file and pay with.⁵ Keeping them apart from day one saves you a correction later.

There are two scenarios that remove your VAT obligation. Some activities are exempt from VAT altogether. The second route is the small business scheme. Invoice no more than €20,000 in a calendar year and you can register for the VAT exemption.¹ You also have to be based in the Netherlands.¹ Nour invoices well over that, so the scheme is not open to her. Wondering whether it is open to you? We set out the trade-off in our guide to the small business scheme.

That settles whether you charge VAT at all. Which rate you charge is the next question.

Which VAT rate applies to what you sell?

The Netherlands has three VAT rates and 21% applies unless a rule says otherwise.² The 9% and 0% rates only apply in certain cases that the law determines.² The 0% rate is mostly for cross-border supplies and services.²

The rate follows what you sell, not who you are. So one business can easily invoice at two rates in the same quarter. The table below sets the three side by side.

How does a VAT return work?

You report what you charged, deduct what you paid and transfer the difference.³ There is no assessment waiting for you. You work out the amount yourself and pay it without being asked.³

Most entrepreneurs file quarterly.⁴ You file online in Mijn Belastingdienst Zakelijk.³ Your bookkeeper can also file for you.³ Paid more VAT than you charged? Then the Belastingdienst refunds the difference.¹

You file even when you charged no VAT and paid none. That is a nil return.³

The Belastingdienst assigns your default period and confirms your dates by letter every year.⁴ You can request monthly or yearly filing instead. So which period applies to you and when does your return have to be in?

What does one quarter look like in practice?

You subtract the VAT you paid from the VAT you charged.¹ Nour files quarterly, so her first period runs from January to March. Her invoices this quarter all go to Dutch customers, so 21% applies to every one.

In those three months she invoices €12,000 excluding VAT. Her customers therefore pay her €2,520 in VAT on top. Over the same period she buys business equipment and supplies for €4,000 excluding VAT. On those she pays €840 in VAT.

Both amounts come out of the same records. On one side sits the VAT on her sales invoices. On the other sits the VAT on her purchases.

What is left is €2,520 minus €840, so €1,680. She reports that amount and transfers it herself, by 30 April at the latest.

Four steps take Nour from her invoices to one amount.

VAT or income tax: what is the difference?

VAT follows your turnover, income tax follows your profit.¹ Nour hands over €1,680 in VAT for the quarter. None of it was ever hers. It came from her customers and passed straight through her business.

Income tax works the other way round. It looks at what is left after your costs. You file it once a year, after the year has closed. Your profit sits in Box 1, the box for work and home. Any salary you earn adds to that same box.

The two returns also run on different clocks. VAT comes back every quarter and income tax once, after the year is done. Seeing both together is usually where the real questions start.

One advisor sees both, because they come from the same set of figures.

Where to go next with your VAT

Nine topics build directly on the VAT rules above.

Filing the return itself is the most common next step. Our VAT return service walks through the form, the deadlines and what happens if you are late.

Made a mistake in a return you already sent? Correcting a VAT return has its own route and its own time limits.

Selling to VAT-registered business customers elsewhere in the EU? Then the ICP declaration is a second, separate report next to your VAT return.

Paid foreign VAT on a hotel, a fair or a supplier abroad? Reclaiming VAT from other EU countries runs through a different portal altogether.

Selling online to consumers across the EU? The Union scheme, better known as the OSS, saves a registration in every EU country.

Three more guides each take one topic further. Invoicing customers in the Netherlands sets out what goes on your invoice. Reverse charge VAT explains when your customer reports the VAT instead of you. Solar panels on your home? VAT on solar panels shows how VAT works for them.

And if your turnover stays low, the small business scheme can take you out of VAT completely.

Not sure where your own situation fits? We look at it with you in one call.