2018 Tax Plan - Outline of VAT, excise tax and consumption tax measures

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Outline of VAT, excise tax and consumption tax measures

2018 Tax Plan - Budget Day (Prinsjesdag)

The following lists the measures proposed in the 2018 Tax Plan in respect of VAT, excise taxes and consumption taxes.

21 September 2017

Outline of VAT, excise and consumption taxes measures

Dutch version

Back to outline 2018 Tax Plan

Stricter definition of medicines

From 17 July through 14 August 2017, the Dutch Ministry of Finance organised an Internet consultation on the stricter definition of medicines for the application of the reduced VAT. The 2018 Tax Plan includes this stricter definition of medicines without any changes.

The stricter rules as from 1 January 2018 imply that the reduced VAT of 6% will only apply to products for which a (parallel) trade licence has been issued as referred to in the Dutch Medicines Act or if they are explicitly exempt from such a licence. As from the abovementioned date, the reduced VAT rate will no longer apply to products which may evidently not be traded as medicines under the Dutch Medicines Act and EU regulations for cosmetics, medicines and medical appliances.
 

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Change in rate setting for seagoing vessels

The VAT Directive obliges EU Member States to apply the zero rate for the supply of vessels that are used on the open seas for passenger transport against payment, freight transport, fishery and such. The exemption also applies to the provision of supplies to such vessels as well as to a large number of services relating to those vessels and the objects that are permanently attached to them or serve their operation.

The European Commission argues that application of the zero rate in the Netherlands is too broad since the current formulation links the zero rate to seagoing vessels as such, without requiring them to be effectively used for navigation on the open seas. Also because infringement proceedings by the European Commission would otherwise be inevitable, the Dutch government proposes to further streamline the wording of Dutch VAT rules to that of the VAT Directive, thus further reducing application of the zero rate. The limitation implies that the zero rate only applies if seagoing vessels are intended to be used for 90% or more for navigation on the open seas.

Abolition of agricultural scheme

As announced on 2016 Budget Day, the VAT agricultural scheme will be cancelled on 1 January 2018. This scheme exempts farmers and other agriculturalists from VAT, while they are not allowed to deduct VAT charged on costs they have incurred. Entrepreneurs can opt to apply the regular VAT rules. Since a decreasing number of companies uses the agricultural scheme, it will now be cancelled.

Following cancellation of the agricultural scheme, application of the reduced rate to several goods and services supplied to will be abolished too. Agriculturalists who currently use the agricultural scheme will be faced with a transition, as a result of which they will have to revise the VAT on investments made prior to 1 January 2018. This will lead to a refund of a part of the VAT that was not deducted before 1 January 2018. This revision normally takes place over a number of years (depending on the date when they first entered into service), but transitional provisions now permit this revision to be effected in one go. For investments acquired but not yet entered into service before 1 January 2018, an input tax credit arises for the full VAT amount in the first tax period of 2018.

Adjustment for services

The 2018 Tax Plan and related bills do not discuss the introduction of adjustment rules for services. This is not required since introduction of an adjustment involves an amendment to a ministerial regulation. Yet from the bill on cancellation of the agricultural scheme we gather that an adjustment for services is still intended to be introduced as at 1 January 2018. After all, agriculturalists can also adjust for services under the transitional provisions. Furthermore, the adjustment for services also seems to apply to services that have been taken into use before 1 January 2018. The transitional provisions in the bill on cancellation of the agricultural scheme do not distinguish on that point between services that have and have not been taken into use on 1 January 2018.

Liability for pledgees, mortgage holders and executors

When pledgees, mortgage holders or executors sell goods on behalf of the owners, they can also recover the VAT proceeds. This means the Dutch Tax Administration misses out on VAT income. It is now proposed to introduce joint and several liability for pledgees, mortgage holders and executors to secure VAT collection. A reverse-charge mechanism already applies to guarantee collection of VAT on sale of immovable property in such cases. The liability applies in those cases where the reverse-charge mechanism does not apply, for instance when the purchaser is not an entrepreneur for VAT purposes or when it involves an item of movable property.

Investigative authority for excise duties

Under current legislation, the Tax Inspector can only investigate excise warehouses and places that are subject to restrictive provisions for the levy of excises. It is now proposed to extend this investigative authority to all buildings, excluding houses, and all land to which access is to be granted under the Dutch State Taxes Act.

Budget Day 2017 - Webcast

After Budget Day, Deloitte Tax Lawyers discussed the new proposed bills during a webcast, on Wednesday September 20, 2017. You can see the recorded webcast (in Dutch) here.

Deloitte Update Cafés

Throughout the country, Deloitte organizes Deloitte Update Cafés three times a year: meetings in a pleasant setting with an abundance of network opportunities. This is where Deloitte experts will bring you up to speed about current developments in your field of expertise. Recently discussed topics included: cyber security, financial reporting, amendments in tax legislation, risk & reputation, management reporting, Mid-Market trends and developments, and applied data analytics. Deloitte Update Cafés take little time: most consist of two one-hour presentations.
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More about Deloitte Update Cafés (in Dutch).

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