Outline of VAT, excise tax and consumption tax measures
2019 Tax Plan - Budget Day (Prinsjesdag)
The following lists the measures proposed in the 2019 Tax Plan in respect of VAT, excise taxes and consumption taxes.
20 September 2018
- Increase of reduced VAT rate
- Revision of the VAT scheme for small business
- Extension of VAT sports exemption
- Implementation of VAT e-Commerce Directive
- Betting and gaming tax on sports bets
Increase of reduced VAT rate
The reduced VAT rate will be increased from 6% to 9% as from 1 January 2019. One of the consequences is an increase of the cost of daily necessities, refreshments, medicines, and books. A sensible shift, according to the government, because a tax on consumption, like the VAT, causes less disruption to the choices of citizens than taxes on labour. The government expects the consequences for the border regions to be limited, since the prices for foodstuffs in the surrounding countries are generally higher than in the Netherlands.
The government states it will not include any additional legislation for transitional situations, thus confirming the earlier statement by the State Secretary for Finance. Services to be performed in 2019 do not require a correction to the new 9% VAT rate if they have been paid before 1 January 2019.
The increase of the rate also affects to Fixed Book Price Act. This Act will be amended to offer entrepreneurs the possibility to change a set fixed price and to thus set off the effect of a VAT adjustment.
Revision of the VAT scheme for small business
The government proposes to modernise the scheme for small business (kleineondernemersregeling, or “KOR”). This scheme solely applies to individuals at the moment. The bill provides for replacement of the current KOR with an optional revenue-related VAT exemption scheme. The maximum revenue threshold is EUR 20,000 per calendar year. The goal is to simplify the scheme for small business, irrespective of their legal form, and to reduce the implementation costs for the Tax Administration.
All businesses that stay below the maximum revenue threshold can be eligible for the exemption. If they opt for the scheme, they will be released from filing VAT returns and related administrative obligations for their supply of goods and services in the Netherlands. Small businesses will still need to declare reverse-charged VAT and VAT due because of intra-Community acquisitions.
If businesses want to apply the exemption they should file a request to that end with the inspector, at the latest four weeks prior to the tax period for which the exemption applies. Since application of the exemption abolishes the right to input tax credit, it may be interesting for businesses to continue to apply the regular VAT rules, particularly when their customers can deduct the VAT they charge.
Application of the new KOR may result in changes in applicability. Hence, because the new KOR has the form of an exemption a revision scheme has been provided for. Under the revision rules small businesses have to repay VAT on investments. A revision will not take place if there is a change in applicability and the amount involved does not exceed a EUR 500 cap.
The new scheme is set to come into force on 1 January 2020. Starting 1 June 2019, businesses will be given the opportunity to report application of the new KOR as from 1 January 2020.
Extension of VAT sports exemption
The VAT sports exemption currently applies to sports services provided to members of sports clubs. EU case law has prompted the government to propose an extension of this exemption as from January 2019. As a result, it will also apply to sports services provided to non-members. As from 2019, the exemption will apply to non-commercial operators of sports accommodations as well. Such operators will not, or no longer, be entitled to deduct input VAT as from 1 January 2019. Combined with the government policy to encourage construction, maintenance and conservation of sports accommodations, these operators may be adversely affected. Hence, a compensation scheme will be introduced. The compensation scheme distinguishes between municipalities and amateur sports organisations. Amateur sports organisations are compensated through the “Subsidy scheme for stimulation of construction and maintenance of sports accommodations”, while municipalities are compensated through the “Regulation on payment of specific stimulation”.
The government will also introduce transitional provisions relating to (i) application of the usual adjustment schemes to remaining construction periods of sports accommodations intended for VAT taxable use which must be paid in 2019, (II) for the first use of new sports accommodations intended for VAT taxable use after 1 January 2019 and (III) for adjusted use of movable and immovable property after 1 January 2019, for which VAT taxable use had been foreseen.
Implementation of VAT e-Commerce Directive
Part of the adopted EU Directive on electronic services and distance sales will be written into the Dutch VAT legislation on 1 January 2019. The sections to be implemented particularly relate to simplification of the VAT regime for telecommunication services, broadcasting services, and electronic services (as applicable as from 1 January 2015).
From that moment on, smaller entrepreneurs established in a single Member State that offer private customers in other Member States online digital services, must pay VAT in their own Member State at the rate applicable there. Still, this simplification can only be applied if an entrepreneur does not exceed the total EUR 10,000 cross-border revenue threshold.
Entrepreneurs performing digital services for individuals in other Member States can apply the invoicing rules of their own EU Member State. Entrepreneurs established outside the EU but with a VAT registration within the EU can use the Mini One-Stop Shop System (MOSS) as from 1 January 2019.
Betting and gaming tax on sports bets
A bill on the legalisation of online games of chance is pending in the Senate right now. On the back of this, it was chosen to introduce a single tax liability for all remote games of chance, with the party offering the game of chance being responsible for withholding the tax. Currently though, the players themselves are liable for tax on country-specific sports bets. In this case, the European Commission identifies incompatible state aid for parties offering country-specific sports bets. Reason why the Betting and Gaming Tax for Sports Bets (Adjustment) Act proposes equal treatment of parties offering country-specific sports bets and parties offering remote sports bets, with the offering party being liable for betting and gaming tax. Concurrent with this amendment, for promotional games of chance (with which the stake is nil or relatively low compared with the prizes paid) it is proposed that they should not be regarded as remote games of chance. As a result, players continue to be liable for betting and gaming tax.