Foreign client

How to deal with foreign VAT rules?

When working with a foreign client the VAT rules could be completely different than you are used to. Each country has different VAT rates. In the Netherlands, VAT works differently when you work with foreign clients as well. Not an easy topic! This article is a good starting point to gain more insight into the different VAT regulations.

Let’s start by going over the basics. When do you deal with VAT rules from across the border? For example, when a client isn’t based in the Netherlands. Perhaps you have a business client from Germany or an individual client from Brazil, in such a situation it is very useful to check the different VAT regulations upfront. 

Moving on to the next step, what should you look out for in that case? Not every client is subject to the same rules. We’ll explain the most important rules for Dutch self-employed entrepreneurs who supply services to a B2B client within the EU (but outside the Netherlands, who supply services to a B2B client outside the EU, and who supply services to individual clients outside the Netherlands.

  • A B2B client within the EU

    Reverse-charging VAT
    In this situation, the VAT is often reverse-charged to the client receiving the service. This means that he has to calculate and pay the VAT himself in his own country.

     On the invoice, you have to put the amount without VAT and write down: VAT reverse-charged.

    The ICP return
    Besides the well-known VAT return, there is also the ICP return. When you have foreign B2B clients within the EU, you have to file this declaration as well. This is where you report transactions between you and the foreign (but European) clients.

  • A B2B client outside the EU

    0% VAT
    Services for B2B clients outside the EU are usually subjected to the 0% VAT rate. This means that on your invoices you don’t have to calculate VAT and for these services, the ICP return is not necessary. Easy, right?

  • An individual client outside the Netherlands

    Dutch VAT
    When having a foreign individual client, usually the regular Dutch VAT rates apply. But, be aware: there a several exemptions on this. Do you want to be sure which VAT rate you need to apply? You can fill out the VAT tool on the website of the Belastingdienst.

It is always smart to double-check whether different rules may apply to your business. For instance, the VAT rules are different again when delivering goods. Of course, the tax advisors of The TaxSavers are happy to help you with this. Fill in the contact form or call us at 020-217012.

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