The Netherlands has recently passed legislation that introduces changes to the value-added tax (VAT) registration rules for non-resident entities.
Starting from January 1, 2025, businesses not based in the Netherlands but in another European Union (EU) member state will be eligible to take advantage of the small business scheme. This scheme grants an exemption from the requirement to register and report VAT if their EU-wide turnover is less than EUR 100,000.
Additionally, the legislation extends the VAT registration threshold for domestic businesses to EUR 20,000, despite prior EU approval to raise the country's VAT registration threshold to EUR 25,000. However, it's important to note that as of January 1, 2025, new EU regulations will empower member states to establish their VAT registration threshold, with a maximum limit set at EUR 85,000. Currently, non-resident businesses are generally obliged to register and account for VAT as soon as they commence taxable transactions in the Netherlands.
The Dutch legislation is a response to the EU Council Directive 2020/285, which was approved in 2020 and amended the VAT Directive. According to this Directive:
"Member States that have implemented the exemption under paragraph 1 must also extend this exemption to supplies of goods and services within their own territory by taxable persons established in another Member State, provided that the following conditions are met:
(a) The taxable person's EU annual turnover does not exceed EUR 100,000.
(b) The value of the supplies in the Member State where the taxable person is not established does not exceed the threshold set by that Member State for granting the exemption to taxable persons established within its borders.
The Directive stipulates that in order to benefit from the exemption, the taxpayer must notify the Member State where they are established in advance. Dutch legislation also facilitates such notifications by domestic taxpayers for supplies made in other EU member states.
If you require assistance in relation to the above and/or would like to discuss anything further, please do not hesitate to contact email@example.com or your usual A.C.T. contact.