Indirect Tax Alert | Deloitte Netherlands

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Indirect Tax Alert

Year-end tips and corrections

The last VAT return of the year is always a special tax return as it is used to make corrections.

21 December 2021

This Indirect Tax Alert outlines the main corrections and points of interest for this tax return. This alert also includes an important VAT change as from 1 January 2022.

Year-end corrections

Private use

VAT entrepreneurs can deduct the input tax on the purchases of goods and services which are used for their taxable activities. If they use goods and services for private use by themselves, their employees or for their business relations, they need to correct the VAT deduction in the final VAT return of the year. During the financial year, VAT entrepreneurs can also deduct all input tax on costs relating to company cars. At the end of the financial year, they have to declare the VAT relating to the private use of such cars by their employees and by themselves.

We have prepared a brochure for you in which we list the most important points for the VAT correction (the so-called BUA correction) and the correction for private use of the company car. Moreover, we have created a useful correction tool (BUA tool) that we can send you separately. Please read our alert on the VAT correction for private use.

Revision

How much input tax may be deducted is set when entrepreneurs purchase goods or services. If entrepreneurs use the goods or services for VAT taxed purposes, the full amount of VAT may be deducted. If goods or services are used for exempted purposes the VAT may not be deducted. If goods or services are used for both VAT taxable and VAT exempted purposes, the input tax may be deducted proportionately. Should the actual use deviate from the purpose then entrepreneurs will as yet need to pay VAT (in the event of more use for exempted supplies) or they may reclaim VAT (in the event of more use for taxed supplies). The data for the full financial year are reviewed once gain by the end of the year, to see whether the level of deduction should be adjusted because the use deviates from the use of goods or services when they were first put into use.

For immovable property this is done during the nine financial years subsequent to the financial year in which the property was put into use; for movable property this is done during four years after the financial year in which the property was put into use. During these years, the deduction must be reviewed at the end of each financial year. If the use in the past financial year leads to a different VAT deduction than the deduction in the financial year in which the property was put into use (more VAT exempt or more VAT taxed), a correction needs to be made (revision).

Pro rata general expenses

The VAT on general expenses may be deducted based on the so-called pro rata. This is the ratio between the taxed payments entrepreneurs receive compared with the aggregate payments. The particular pro rata for a year should be determined by the end of each year.

90% statement and 70% statement upon transfer and lease of immovable property

The transfer and lease of immovable property is technically exempt from VAT, parties may opt for a taxed transaction in both situations. However, this is only possible if the buyer or the lessee, respectively, use the immovable property for taxed supplies for at least 90% (or in certain cases 70%).

Purchasers of an item of immovable property must declare they comply with this 90% standard in the financial year when the property was supplied and the financial year subsequent to that. This should be done within four weeks after expiry of this period. As a result, for immovable property for which a taxed supply was opted for in 2020, the purchaser must issue this 90% statement by 28 January 2022 at the very latest.

In the event of taxed rent, lessees must check before the end of the year whether they complied with the 90% standard during the year. If they did not comply, they must inform the lessor and their own tax inspector within four weeks of the end of the financial year.

Reclaiming foreign VAT

Any entrepreneurs who have received invoices with foreign VAT in 2021, may reclaim this VAT through the Dutch Tax Administration. Requests to that end must be filed on 30 September 2022 at the latest. An entrepreneur may already request a refund as from 1 January 2022.

Payment deferral due to COVID-19

VAT entrepreneurs who have applied for a special deferment of payment with regard to your VAT returns must pay their tax debt in 60 monthly installments from 1 October 2022. Since all the granted deferral of payment will stop from 1 February 2022, VAT entrepreneurs have to meet all payment obligations that have arisen from that date. This includes payment obligations that originate in the period before 1 February 2022, such as the payment obligation for VAT for December 2021 or the fourth quarter of 2021.

Changes in collection and tax interest
As a result of COVID-19, the interest on overdue tax (‘invorderingsrente’) has been temporarily reduced from 4% to 0.01% as of March 23, 2020. The interest rate will increase step by step. On July 1, 2022, the recovery interest rate will be set at 1%, at 2% on January 1, 2023, 3% on July 1, 2023 and 4% on January 1, 2024.

The interest on VAT due (‘belastingrente’) was also temporarily reduced from 4% for VAT to 0.01% until 1 October 2020 as a result of COVID-19. Since 1 October 2020, the rate of 4% for VAT applies.

Changes in VAT as of 2022

New portal for VAT related matters mandatory - eHerkenning required as login method

From 2022 onwards, it will be mandatory for VAT taxable persons performing activities in the Netherlands to submit their VAT returns and to communicate other VAT related matters in a new portal of the Dutch Tax Authorities. An online identification system called eHerkenning (eRecognition) will be mandatory to enter this portal.

The new portal is called ‘Mijn Belastingdienst Zakelijk’ and will replace (in most cases) the current portal. Taxable persons are already using the portal for reporting obligations in other taxes (e.g. requests for certain customs licenses). The new portal has also to be used to submit supplementary VAT returns or statements of intra-Community services (ICP) for 2022. Further, the new portal can be utilized to communicate other relevant changes (e.g. new bank account details).

VAT entrepreneurs have the choice to apply for eHerkenning themselves or to authorize an intermediary to arrange matters on their behalf. For certain (foreign) companies, other login methods are necessary or other persons must be authorized.

The application process can therefore take some time. Entrepreneurs would do well to check whether eHerkenning is necessary for their business and which persons should have eHerkenning. The DTA has published a step-by-step plan for entrepreneurs for this. Your Deloitte VAT advisor can assist you with questions related to this subject. Read our alert on the introduction of eHerkenning (and the exceptions) for VAT matters in 2022.

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