The standard Dutch Value Added Tax VAT rate is to rise from 19% to 21% on the 1st October 2012.
The increase is part of a package of austerity measures brought forward by the collation government as its attempts to keep the Netherlands deficit to within 3% of GDP. This is a key criteria of countries using the Euro.
The Netherlands joins a number of other European countries which have been increasing VAT in response to declining revenues and nervous financial markets. They include Spain raising VAT to 21% later this year, Germany increasing VAT to 19% in 2007 and the UK raising VAT to 20%.
The Dutch VAT rise means that companies registered for VAT as non-residents will also have to plan for their VAT compliance. Dutch VAT returns should include any supplies of goods or services at the new VAT rate from 1 October.
The rules on the tax point, which govern when Dutch VAT should be charged, and the correct VAT rate can be determined, are contained in our Dutch VAT briefing. Companies should pay particular attention to the on going provision of services, where the tax point is not necessarily clear. If there is any confusion, companies should switch to the new, higher VAT rate as the tax authorities will look to them to meet any shortfall with VAT rise.