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Eindhoven Startups Foundation
9 September 2015
Value Added Tax
by
Jürgen van de Sande
Program
• Who I am / who is De Wert?
• Part 1:
– VAT Entrepeneurship
– VAT Declaration
• Part 2:
– Invoice requirements
– Mini One Stop Shop
Who I am?
Jürgen van de Sande AA
accountant partner
starting companies and growers SMEs
annual reports, fiscal declarations
finance, structure/organization, acquisition
human resources, dwo and accountancy departments
OUR VISION
An entrepreneur’s life is full of important events. Like starting
your company, growing or downsizing, cooperating or ending
your business. Each and every choice you make will affect the
future of your company.
De Wert is your partner of choice. We have been supporting
entrepreneurs since 1959 with accountancy, tax and HR advice,
payroll and administrative services. Therefore, no matter what
phase your company is in: rest assured with De Wert.
Who is De Wert?
The first step is the hardest …
Little ones grow
Sometimes it hurts to let go
VAT Entrepreneurship
START: determine whether you are a VAT-entrepreneur.
For the VAT it is NOT important if you want to make a profit
or if you actually make one!
VAT
0%
6%
21%
Exempt
Reverse charge
NO VAT
VAT Entrepreneurship
WHO?
- Everyone
- Independent
- Durable
VAT Entrepreneurship
WHEN?
Participating in the economy:
- Action
- Focused on consumption by an individual party
- Non-symbolical payment that is directly linked to the
action
VAT Entrepreneurship
WHERE?
Country of service or sales is fixed by law.
2 types of VAT with different rules to determine which
countries’ law is applicable.
1. VAT related to services
2. VAT related to purchase and selling of goods
Question
John has a company that organizes a yearly dance festival.
In 2012 and 2013 the losses were - € 10k and - € 15k, in
2014 the profit was € 25k.
VAT entrepreneur or not?
Answer:
Yes, John is a VAT entrepreneur. WHO, WHEN and
WHERE are all applicable. The fact that John’s company
doesn’t make profit every year is NOT RELEVANT for the
VAT. It is relevant for the income/company tax however.
1. VAT related to services.
Services are: any actions for which you receive payment and that do
not constitute supplies of goods. Includes internal services (use of
services from your business for non-VAT business activities).
B2B
Main rule for B2B is that the country of service is the country where the
customer is based.
There are exceptions, for example when services have to do with
immovable property.
B2C
Main rule is that the country of service is the country where the supplier
is based.
VAT Entrepreneurship
2. VAT related to purchase and selling of goods
- Selling goods;
- Selling goods on hire purchase;
- Building and delivering immovable property;
- Supplying and installing or assembling goods (e.g. kitchens);
- Supplying goods internally
You always have to follow the actual journey of the goods. The
main rule is that if the goods are transported, the VAT law of
the country where transport started is applicable. Different
rules apply with ‘distance sales’.
VAT Entrepreneurship
Distance sales
Applicable when an entrepreneur sells goods to private
individuals or non-VAT entrepreneurs, and the goods are
transported from one EU country to another EU country.
This special rule is designed to prevent individuals from
shopping in the country with the lowest VAT rate.
When a seller exceeds the threshold for that country, he has to
apply the VAT rate of that country and registrate at the foreign
tax office.
VAT Entrepreneurship
VAT or no VAT (exemption)?
No VAT
Some services or goods are not taxable with VAT. For example:
letting or selling immovable property, which is more than 2
years old. Education, healthcare services etc. etc.
VAT
- Which amount is taxable?
- Which VAT tariff: 21%, 6% or 0%?
- When do you have to pay VAT?
- Refund of input taxes (VAT you pay on purchases)
 VAT declaration: to pay/ to receive
VAT Declaration
VAT Declaration
Logic of the VAT declaration:
1.Supplies/services BY me
2.Supplies/services reverse charged TO me
3.International supplies/services rendered BY me
4.International supplies/services rendered TO me
5.Calculation of total to be paid or refunded
VAT Declaration/ 1
1a. Output 21%. Standard (high) tariff.
1b. Output 6%. The 6% tariff is also called the low tariff. This
tariff is applied to many common products or services, such
as food and drink, agricultural products and services,
medicines, books, daily newspapers and magazines.
1c. Other tariffs, except 0%. Only applies for sports- and
company canteens.
1d. Private use of a company car, phone, goods, gas, water and
electricity. Normally corrected in the last VAT declaration of
the year.
1e. Supplies/services taxed at 0% or not taxed at your level.
VAT Declaration/ 1d
Entrepreneurs and their cars
-Entrepreneur with a company car. VAT is fully deductible (as
long as the car isn’t used for exempt services). In the final VAT
declaration of the year 2.7% of the catalogue price including
VAT/BPM (1.5% for cars that were already used for 5 years) has
to be corrected. OR: a correction can be made, based on actual
private use as kept in an administration.
-Entrepreneur with a private car that is used for the company.
VAT that is related to business use is deductible. No
administration? Possibility for opting for 1.5% of the catalogue
price (including VAT and BPM)
VAT Declaration/ 1e
1e. Supplies/ services taxed at 0% or not taxed at your
level.
- Supply of goods and services that are taxed with 0% VAT;
- Supply/ delivery of an immovable property in which you and
the buyer have opted for a taxable supply. Reverse charged
VAT;
- Supply of goods and services on a sub-contract basis and
outsourcing of personnel in the (ship)building & metal
construction industry, and delivery of mobile phones,
computer chips and waste/ used materials. Reverse charged
VAT
21
VAT Declaration/ 2a
2a. Tax reversed TO you
Examples of situations in which the VAT has been reverse
charged to you:
• Supplies of goods and services on a sub-contract basis and
outsourcing of personnel in the (ship)building and cleaning
industry.
• Immovable property, if the option of a taxable supply was
selected for the supply of business premises.
You must calculate the VAT yourself. This amount can be
deducted as input tax (5b). See explanatory notes to question
5b further in this presentation.
Question
A building company is building a house and commissions you (a
painter) to paint all frames and doors. Your invoice (and
payment) is € 5.000. What do you mention in the tax
declaration?
VAT Declaration/ 3b
3b: Intra-Community transactions.
Enter the amount of the goods supplied and services provided within
the EU. This amount should be specified in the Intra-Community
transactions declarations (opgaaf ICP) in the period during which
the services are supplied. The invoice date is irrelevant!
Supplied goods: Goods that you supplied from the Netherlands to an
entrepreneur in another EU country. You transported these goods.
The customer must declare VAT on the acquisition of these goods.
Supplied services: Services supplied to a EU-entrepreneur. The foreign
entrepreneur has to declare the VAT in his own country. If the main
rule doesn’t apply: don’t state these services in the tax return.
VAT Declaration/ 4a
Goods and services supplied TO you from abroad
4a: Supplies/services from non-EU countries.
- You imported goods into the Netherlands from outside the EU,
using article 23 authorisation.
- You purchased services in the Netherlands from a non-EU-
entrepreneur who has reverse- charged the VAT to you. In this
case, you must declare VAT in the Netherlands. The amounts
need not be broken down according to the various VAT rates.
Under certain conditions, you can deduct the VAT as input tax
under question 5b. On balance, you will not pay any VAT.
VAT Declaration/ 4b
4b Supplies/ services from EU countries
- You purchased goods from EU-entrepreneurs and those goods
have been transported to the Netherlands. This is called an intra-
Community acquisition: you must declare VAT in the
Netherlands. Your supplier did not charge foreign VAT;
- You purchased services in the Netherlands from an EU-
entrepreneur who has reverse-charged the VAT to you. You
must declare VAT in the Netherlands. The amounts need not be
broken down according to the various VAT rates.
Under certain conditions, you can deduct the VAT as input tax
under question 5b. On balance, you will not pay any VAT. Intra-
Community services must be declared during the period in which
they are provided. The invoice date is irrelevant.
VAT Declaration/ 5b
5b Input tax
Input tax is Dutch VAT on goods and services that you
purchased for your business. They include:
- VAT charged to you by other entrepreneurs;
- VAT that you must pay, because the VAT has been
reverse-charged to you (question 2a, 4a or 4b).
VAT Declaration/ 5b
Conditions for deduction of input tax
You must be able to provide evidence of the VAT you
deduct as input tax, base on invoices that meet the
statutory requirements.
VAT Declaration/ 5b
You may only deduct the VAT that you paid on purchases of
goods and services if you meet the following two conditions:
1.You use the goods and services for commercial purposes, i.e.
for your business. You may not deduct the VAT on goods and
services that you only use for private purposes.
2.You use the goods and services for activities that are subject
to VAT. You cannot deduct VAT as input tax if you use the goods
and services for exempt business activities.
It is possible that you purchase goods or services that you:
- use for both business and private purposes;
- use for both taxed and exempt activities;
These situations involve mixed use. Alternative rules apply here.
VAT Declaration/ 5b
Please note!
You cannot deduct VAT on certain business expenses. For
example in the following situations:
- Purchases that you use for exempt business activities;
- Food and drinks in hotels, restaurants and cafés
- Purchases that you use for employee benefits, if the
benefit per employee is more than € 227.
VAT Declaration/ 5d
Requirements for Small businesses scheme (KOR): VAT
discount for small entrepreneurs.
•Your business must be registered in the Netherlands (unless
you run a foreign business that only provides services in the
Netherlands).
•You run a one-man business or your company is a joint venture
involving natural persons, such as a partnership (maatschap) or
a general partnership (VOF).
•After deduction of input tax, you pay less than €1.883 on an
annual basis in VAT.
•In order to be eligible for exemption from the administrative
obligations, the amount to be paid must be less than €1.345 on
an annual basis.
Invoice requirements
•the name and address of the supplier
•the VAT identification number of the supplier
•your name and address
•the invoice number
•the invoice date
•the date on which the goods or services were supplied
•the quantity and type of goods supplied
•the nature and type of services supplied
Invoice requirements
Invoices must also include the following data for every VAT tariff or
exemption:
•the price per piece or unit, excluding VAT
•any reductions that are not included in the price
•the VAT tariff that has been applied
•the cost (the price excluding VAT)
•in case of advance payment: the date of payment, if this is different from
the invoice date
•the amount of VAT
•in some cases your VAT identification number must also be included on
the invoice. This is the case for export of goods to other EU countries and
for certain services involved thereby, such as transport services. Your VAT
identification number must also be included on the invoice in cases of
reverse-charging
•furthermore it must be apparent from the invoice whether a special VAT
regulation applies
Question
Deduction of input tax:
YES or NO?
Mini One Stop Shop/ MOSS
Changes to digital services as from 2015
•As from 1 January 2015, the rules on telecommunications,
broadcasting and electronically supplied services (digital services)
have changed. Starting then, these services are taxed in the country of
residence or establishment of your customer. It does not matter if your
customer is a private individual or entrepreneur.
•In order to prevent you from having to register in each EU Member
State where you supply digital services, the Mini One Stop Shop
(MOSS) scheme has been introduced on 1 January 2015. This scheme
allows businesses supplying digital services to private individuals to
state the VAT on these services via one EU Member State.
Mini One Stop Shop/ MOSS
Digital services include:
•Electronic services
These are services supplied through the Internet or a digital network. They
are mostly automated services and cannot be supplied without information
technology. Examples: on-line traffic information and weather reports, on-
line daily newspapers and magazines, on-line data storage, access to or
downloading software, use of search engines and on-line games.
•Telecommunication services
These services include the transmission, broadcasting or reception of
signals, text, images, sounds or information through wires, radio waves,
optic or other electromagnetic systems.
•Radio and television broadcasting services
MOSS / VAT Rates
VAT rates can be found at:
http://ec.europa.eu/taxation_customs/tic/public/vatRates/vatratesSearch.html
#content
MOSS / Declaration
Mention each EU country, even when your turnover in that
country is zero.
Questions?

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VAT issues for startups

  • 1. Eindhoven Startups Foundation 9 September 2015 Value Added Tax by Jürgen van de Sande
  • 2. Program • Who I am / who is De Wert? • Part 1: – VAT Entrepeneurship – VAT Declaration • Part 2: – Invoice requirements – Mini One Stop Shop
  • 3. Who I am? Jürgen van de Sande AA accountant partner starting companies and growers SMEs annual reports, fiscal declarations finance, structure/organization, acquisition human resources, dwo and accountancy departments
  • 4. OUR VISION An entrepreneur’s life is full of important events. Like starting your company, growing or downsizing, cooperating or ending your business. Each and every choice you make will affect the future of your company. De Wert is your partner of choice. We have been supporting entrepreneurs since 1959 with accountancy, tax and HR advice, payroll and administrative services. Therefore, no matter what phase your company is in: rest assured with De Wert. Who is De Wert?
  • 5. The first step is the hardest …
  • 7. Sometimes it hurts to let go
  • 8. VAT Entrepreneurship START: determine whether you are a VAT-entrepreneur. For the VAT it is NOT important if you want to make a profit or if you actually make one! VAT 0% 6% 21% Exempt Reverse charge NO VAT
  • 10. VAT Entrepreneurship WHEN? Participating in the economy: - Action - Focused on consumption by an individual party - Non-symbolical payment that is directly linked to the action
  • 11. VAT Entrepreneurship WHERE? Country of service or sales is fixed by law. 2 types of VAT with different rules to determine which countries’ law is applicable. 1. VAT related to services 2. VAT related to purchase and selling of goods
  • 12. Question John has a company that organizes a yearly dance festival. In 2012 and 2013 the losses were - € 10k and - € 15k, in 2014 the profit was € 25k. VAT entrepreneur or not? Answer: Yes, John is a VAT entrepreneur. WHO, WHEN and WHERE are all applicable. The fact that John’s company doesn’t make profit every year is NOT RELEVANT for the VAT. It is relevant for the income/company tax however.
  • 13. 1. VAT related to services. Services are: any actions for which you receive payment and that do not constitute supplies of goods. Includes internal services (use of services from your business for non-VAT business activities). B2B Main rule for B2B is that the country of service is the country where the customer is based. There are exceptions, for example when services have to do with immovable property. B2C Main rule is that the country of service is the country where the supplier is based.
  • 14. VAT Entrepreneurship 2. VAT related to purchase and selling of goods - Selling goods; - Selling goods on hire purchase; - Building and delivering immovable property; - Supplying and installing or assembling goods (e.g. kitchens); - Supplying goods internally You always have to follow the actual journey of the goods. The main rule is that if the goods are transported, the VAT law of the country where transport started is applicable. Different rules apply with ‘distance sales’.
  • 15. VAT Entrepreneurship Distance sales Applicable when an entrepreneur sells goods to private individuals or non-VAT entrepreneurs, and the goods are transported from one EU country to another EU country. This special rule is designed to prevent individuals from shopping in the country with the lowest VAT rate. When a seller exceeds the threshold for that country, he has to apply the VAT rate of that country and registrate at the foreign tax office.
  • 16. VAT Entrepreneurship VAT or no VAT (exemption)? No VAT Some services or goods are not taxable with VAT. For example: letting or selling immovable property, which is more than 2 years old. Education, healthcare services etc. etc. VAT - Which amount is taxable? - Which VAT tariff: 21%, 6% or 0%? - When do you have to pay VAT? - Refund of input taxes (VAT you pay on purchases)  VAT declaration: to pay/ to receive
  • 18. VAT Declaration Logic of the VAT declaration: 1.Supplies/services BY me 2.Supplies/services reverse charged TO me 3.International supplies/services rendered BY me 4.International supplies/services rendered TO me 5.Calculation of total to be paid or refunded
  • 19. VAT Declaration/ 1 1a. Output 21%. Standard (high) tariff. 1b. Output 6%. The 6% tariff is also called the low tariff. This tariff is applied to many common products or services, such as food and drink, agricultural products and services, medicines, books, daily newspapers and magazines. 1c. Other tariffs, except 0%. Only applies for sports- and company canteens. 1d. Private use of a company car, phone, goods, gas, water and electricity. Normally corrected in the last VAT declaration of the year. 1e. Supplies/services taxed at 0% or not taxed at your level.
  • 20. VAT Declaration/ 1d Entrepreneurs and their cars -Entrepreneur with a company car. VAT is fully deductible (as long as the car isn’t used for exempt services). In the final VAT declaration of the year 2.7% of the catalogue price including VAT/BPM (1.5% for cars that were already used for 5 years) has to be corrected. OR: a correction can be made, based on actual private use as kept in an administration. -Entrepreneur with a private car that is used for the company. VAT that is related to business use is deductible. No administration? Possibility for opting for 1.5% of the catalogue price (including VAT and BPM)
  • 21. VAT Declaration/ 1e 1e. Supplies/ services taxed at 0% or not taxed at your level. - Supply of goods and services that are taxed with 0% VAT; - Supply/ delivery of an immovable property in which you and the buyer have opted for a taxable supply. Reverse charged VAT; - Supply of goods and services on a sub-contract basis and outsourcing of personnel in the (ship)building & metal construction industry, and delivery of mobile phones, computer chips and waste/ used materials. Reverse charged VAT 21
  • 22. VAT Declaration/ 2a 2a. Tax reversed TO you Examples of situations in which the VAT has been reverse charged to you: • Supplies of goods and services on a sub-contract basis and outsourcing of personnel in the (ship)building and cleaning industry. • Immovable property, if the option of a taxable supply was selected for the supply of business premises. You must calculate the VAT yourself. This amount can be deducted as input tax (5b). See explanatory notes to question 5b further in this presentation.
  • 23. Question A building company is building a house and commissions you (a painter) to paint all frames and doors. Your invoice (and payment) is € 5.000. What do you mention in the tax declaration?
  • 24. VAT Declaration/ 3b 3b: Intra-Community transactions. Enter the amount of the goods supplied and services provided within the EU. This amount should be specified in the Intra-Community transactions declarations (opgaaf ICP) in the period during which the services are supplied. The invoice date is irrelevant! Supplied goods: Goods that you supplied from the Netherlands to an entrepreneur in another EU country. You transported these goods. The customer must declare VAT on the acquisition of these goods. Supplied services: Services supplied to a EU-entrepreneur. The foreign entrepreneur has to declare the VAT in his own country. If the main rule doesn’t apply: don’t state these services in the tax return.
  • 25. VAT Declaration/ 4a Goods and services supplied TO you from abroad 4a: Supplies/services from non-EU countries. - You imported goods into the Netherlands from outside the EU, using article 23 authorisation. - You purchased services in the Netherlands from a non-EU- entrepreneur who has reverse- charged the VAT to you. In this case, you must declare VAT in the Netherlands. The amounts need not be broken down according to the various VAT rates. Under certain conditions, you can deduct the VAT as input tax under question 5b. On balance, you will not pay any VAT.
  • 26. VAT Declaration/ 4b 4b Supplies/ services from EU countries - You purchased goods from EU-entrepreneurs and those goods have been transported to the Netherlands. This is called an intra- Community acquisition: you must declare VAT in the Netherlands. Your supplier did not charge foreign VAT; - You purchased services in the Netherlands from an EU- entrepreneur who has reverse-charged the VAT to you. You must declare VAT in the Netherlands. The amounts need not be broken down according to the various VAT rates. Under certain conditions, you can deduct the VAT as input tax under question 5b. On balance, you will not pay any VAT. Intra- Community services must be declared during the period in which they are provided. The invoice date is irrelevant.
  • 27. VAT Declaration/ 5b 5b Input tax Input tax is Dutch VAT on goods and services that you purchased for your business. They include: - VAT charged to you by other entrepreneurs; - VAT that you must pay, because the VAT has been reverse-charged to you (question 2a, 4a or 4b).
  • 28. VAT Declaration/ 5b Conditions for deduction of input tax You must be able to provide evidence of the VAT you deduct as input tax, base on invoices that meet the statutory requirements.
  • 29. VAT Declaration/ 5b You may only deduct the VAT that you paid on purchases of goods and services if you meet the following two conditions: 1.You use the goods and services for commercial purposes, i.e. for your business. You may not deduct the VAT on goods and services that you only use for private purposes. 2.You use the goods and services for activities that are subject to VAT. You cannot deduct VAT as input tax if you use the goods and services for exempt business activities. It is possible that you purchase goods or services that you: - use for both business and private purposes; - use for both taxed and exempt activities; These situations involve mixed use. Alternative rules apply here.
  • 30. VAT Declaration/ 5b Please note! You cannot deduct VAT on certain business expenses. For example in the following situations: - Purchases that you use for exempt business activities; - Food and drinks in hotels, restaurants and cafés - Purchases that you use for employee benefits, if the benefit per employee is more than € 227.
  • 31. VAT Declaration/ 5d Requirements for Small businesses scheme (KOR): VAT discount for small entrepreneurs. •Your business must be registered in the Netherlands (unless you run a foreign business that only provides services in the Netherlands). •You run a one-man business or your company is a joint venture involving natural persons, such as a partnership (maatschap) or a general partnership (VOF). •After deduction of input tax, you pay less than €1.883 on an annual basis in VAT. •In order to be eligible for exemption from the administrative obligations, the amount to be paid must be less than €1.345 on an annual basis.
  • 32. Invoice requirements •the name and address of the supplier •the VAT identification number of the supplier •your name and address •the invoice number •the invoice date •the date on which the goods or services were supplied •the quantity and type of goods supplied •the nature and type of services supplied
  • 33. Invoice requirements Invoices must also include the following data for every VAT tariff or exemption: •the price per piece or unit, excluding VAT •any reductions that are not included in the price •the VAT tariff that has been applied •the cost (the price excluding VAT) •in case of advance payment: the date of payment, if this is different from the invoice date •the amount of VAT •in some cases your VAT identification number must also be included on the invoice. This is the case for export of goods to other EU countries and for certain services involved thereby, such as transport services. Your VAT identification number must also be included on the invoice in cases of reverse-charging •furthermore it must be apparent from the invoice whether a special VAT regulation applies
  • 34. Question Deduction of input tax: YES or NO?
  • 35. Mini One Stop Shop/ MOSS Changes to digital services as from 2015 •As from 1 January 2015, the rules on telecommunications, broadcasting and electronically supplied services (digital services) have changed. Starting then, these services are taxed in the country of residence or establishment of your customer. It does not matter if your customer is a private individual or entrepreneur. •In order to prevent you from having to register in each EU Member State where you supply digital services, the Mini One Stop Shop (MOSS) scheme has been introduced on 1 January 2015. This scheme allows businesses supplying digital services to private individuals to state the VAT on these services via one EU Member State.
  • 36. Mini One Stop Shop/ MOSS Digital services include: •Electronic services These are services supplied through the Internet or a digital network. They are mostly automated services and cannot be supplied without information technology. Examples: on-line traffic information and weather reports, on- line daily newspapers and magazines, on-line data storage, access to or downloading software, use of search engines and on-line games. •Telecommunication services These services include the transmission, broadcasting or reception of signals, text, images, sounds or information through wires, radio waves, optic or other electromagnetic systems. •Radio and television broadcasting services
  • 37. MOSS / VAT Rates VAT rates can be found at: http://ec.europa.eu/taxation_customs/tic/public/vatRates/vatratesSearch.html #content
  • 38. MOSS / Declaration Mention each EU country, even when your turnover in that country is zero.

Editor's Notes

  1. Everyone: An animal for instance, cannot be a VAT entrepreneur. However, a person, a corporation or a partnership can. Independent: you have to work for yourself and have to be responsible for your actions. Someone working for a boss, is not a VAT entrepreneur. Durable: if you participate in the economy only once, you are not a VAT entrepreneur.
  2. Action: doing something, doing nothing or tolerating something. Consumption by individual party: if it isn’t possible to point out who is exactly gaining from the services, VAT is not applicable. Occurs mainly with subsidies. For instance when a government or a municipality (gemeente) gives money (subsidy) to ‘make sure a part of town will be safer’: it is not clear who’s gaining. Non symbolical payment: I compose the annual accounts for a charity for only € 5. That is definitely a symbolical payment!
  3. If goods are transported from Netherlands to France. Dutch VAT is applicable. Later on we will see that when goods are moved to an entrepreneur within EU, we’ll have a Intra-Community acquisition. This means our invoice will state ‘0%, intra communal delivery’. The buyer will pay French VAT and deduct the input taxes in his French declaration. We state the goods under 3b in our Dutch declaration and fill in an ICP.
  4. Examples: Threshold for Belgium, Cyprus, Finland, Greece, Ireland, Italy, Austria, Portugal is € 35.000. Germany: € 100.000 etc etc
  5. NOT for: Private companies (BV’s) and Limited companies