Year-end tips and corrections | Deloitte Nederland

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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.

28 December 2022

This Indirect Tax Alert outlines the main corrections and points of interest for this tax return. This alert also includes the important VAT and Real Estate Transfer Tax (“RETT”) changes as from 1 January 2023.

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 costs

The level of input VAT deduction on general costs is based on the so-called pro rata (the ratio between turnover generating input VAT deduction and total turnover). The (definitive) particular pro rata for a year should be determined by the end of each year. If it appears that the pro rata used during the calendar year was incorrect, a correction should be made in section 5b of the last VAT return of 2022.

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 2021, the purchaser must issue this 90% statement by 27 January 2023 at the very latest.

In the event of taxed lease, 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 entrepreneur who have received invoices with foreign VAT in 2022 may reclaim this VAT through the Dutch Tax Authorities. Requests to that end must be filed ultimately on 30 September 2023. An entrepreneur may already request a refund as from 1 January 2023.

A refund claim for VAT paid in the United Kingdom ("UK") will be subject to different rules after the Brexit. A refund claim for VAT paid in the period 1 July 2021 to 30 June 2022 must be submitted to the Tax Authorities of the UK (HMRC) ultimately on 31 December 2022. See the following document from HMRC for further explanation.

Globalisation scheme

VAT entrepreneurs who determine their profit margin for the margin scheme based on the globalisation scheme must determine the annual profit margins after the end of 2022. If it turns out that less VAT would be due based on the annual profit margins than was paid during the periods in the calendar year, a written request can be made for a VAT refund. The refund request must be made with the first VAT return of 2023.

Changes in VAT and RETT as of 2023

Zero VAT rate for solar panels

From 1 January 2023, the zero VATrate will be applied to the supply and installation of solar panels on or near a house.

In this context, a Policy notice includes an approval for individual solar panel owners whereby a refund of (the general VAT rate of 21%, subject to conditions, is granted on advance payments made in 2022, also if the solar panels are delivered and installed in 2023. However, a choice to apply the Small Businesses Scheme (KOR) must already be made in the year 2022 to apply this approval.

Further research will still be carried out on the possibility and advisability of applying the zero-rate of VAT for the supply and installation of the solar panels on public or other buildings used for public interest activities.

VAT for nitrous oxide cartridges to 21%

The general VAT rate of 21% will apply to the supply of nitrous oxide-filled cartridges (so-called nitrous oxide/N2O cartridges). This will discourage the sale of nitrous oxide cartridges, mainly to young people, who use it as a recreational intoxicant, the government said. A specific exception is made for the supply of nitrous oxide that qualifies as a medicine. This will continue to be subject to the reduced VAT rate of 9%.

VAT on energy back to 21%

From 1 July 2022 to 31 December 2022, the reduced VAT rate of 9% will apply to the supply of energy (natural gas, electricity and district heating). From 1 January 2023, the VAT rate will return to the general VAT rate of 21%. In 2023, the support for residents and businesses will continue by other means (e.g. in the form of a reduced Energy Tax).

DAC7

From 1 January 2023, the DAC7 regulations will come into force. Digital platforms will have to collect, record and report data on sellers to the tax authorities during 2023 and in 2024. For more information, see our dedicated DAC7 website.

Real Estate Transfer Tax (RETT)

From 1 January 2023, the general RETT rate will increase from 8% to 10.4%. Because the reduced rate of 2% will continue to apply to the purchase of a home intended for own use, the increase in the general rate is expected to particularly affect investors in residential and commercial properties. The aim is to make the purchase of houses by investors less attractive, so that a larger share remains available for among others first-time buyers. However, most of the measure affects commercial real estate, which is recognised as a distortive effect.

Increase of the collection 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 1 July 2022, the recovery interest rate will be set at 1%, at 2% on 1 July 2023, 3% on July 1 2023 and 4% on 1 January 2024.

Limitation on calculation of tax interest

Following a judgment of the Dutch Supreme Court of 18 November 2022, VAT entrepreneurs can claim a reduction of tax interest charged for the period when the VAT due has already been remitted to the Dutch Tax Authorities. From 1 January 2023, this will be included in new legislation (Article 30ia AWR). For tax interest decisions that were not yet irrevocably fixed on 18 November 2022, taxpayers can request a tax interest mitigation by invoking the abovementioned judgement. If reduction of tax interest on the initiative of the Dutch Tax Administration is not possible, application will have to take place retrospectively in objection or following a request for reduction ex officio (‘ambtshalve vermindering’).

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