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From 1st October 2012, the VAT percentage will be increased from 19% to 21% to cover the deficits caused by the economic recession.
The VAT increase in practice
How will the VAT increase work out in practice? Actually quite straightforward. Deliveries or services provided before 1st October 2012 remain taxed at 19% and deliveries and services provided after 1st October 2012 are taxed at 21%. Unless the low rate of 6% ??or an exemption applies, of course. It is therefore the moment of providing the service which is relevant, not the moment when the service is charged by means of an invoice or the date on which the contract was concluded. Take notice of this when you issue an invoice.
It may be possible that you have to use two different VAT rates if you issue an invoice containing deliveries of products on two different dates. In that case it may be easier to issue two separate invoices instead. Check with your software supplier how they have dealt with the VAT adjustment.
Some frequently asked questions
Are entrepreneurs already allowed to include a VAT percentage of 21% on their invoice issued before 1st October 2012 for deliveries or services provided after 30th September 2012?
Yes. In order to prevent that entrepreneurs must issue an additional invoice for the difference between the 19% and 21% rate entrepreneurs may already include the services which are provided after 30th September 2012 on an invoice which is sent before 1st October 2012 at the VAT rate of 21%. Entrepreneurs who receive an invoice before 1st October 2012 containing a service with 21% VAT can deduct the entire VAT amount according to the standard rules.
Which rate is applicable if it concerns ongoing services which started before 1st October 2012 but will end after 30th September 2012?
In this case the services must be split. For the part of the services which take place before 1st October the 19% rate is applicable for the remainder the 21% rate is apllicable. This is relevant for example in case of subscriptions.
What should an entrepreneur do if he has already sent an invoice to the client for services provided during the entire year?
In that case the entrepreneur can send the client an additional invoice for the difference in VAT of 2% for the period 1st October 2012 till 31st December 2012. The Dutch VAT law specifically grants this option in case of increase of the VAT rate. It is also possible to include the additional VAT for 2012 in the invoice for 2013 to prevent extra work. The additional VAT will however still have to be declared (and paid by the entrepreneur) in the last VAT return for 2012.
Make sure your invoices always contain the correct amount of VAT. If the information on the invoice is wrong your client can refuse to accept the invoice. The accountants of Expatax can help you with the business administration of your company, the filing of the VAT returns and the annual accounts. You can contact us on firstname.lastname@example.org.
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