Are you an entrepreneur with a permanent establishment or a freelancer with a work visa living in the Netherlands, but not yet speaking Dutch (fluently)?
Here’s your step by step guide on how to submit your VAT declaration that will set you on the path to finding joy in being your own boss.
As the saying goes: “there are two certainties in life: death and taxes”. In the Netherlands the latter comes in the form of blue envelopes from the tax authorities (the Belastingdienst), which arrive like clockwork each quarter (in most cases, see below). As a freelancer you’re obligated by law to submit a VAT return, and the Belastingdienst wants you to pay the correct amount.
In this blog, you’ll read everything you need to know about the VAT return, so that you get it right and minimize the chances of nasty surprises in the future, either in the form of audits or fines. We also explain how Tellow can help you with doing your declarations.
What is a VAT return?
If you are self-employed you are legally obliged to charge VAT on the services or products you are selling to your customers. The VAT is added on top of the price you charge and must be put aside to be transferred to the Belastingdienst at the end of each period. VAT is paid by the end user, i.e. the consumer, which is why some people also refer to VAT as consumer tax. In Dutch, the VAT return is called ‘de btw-aangifte’.
Can I claim back VAT?
As a freelancer, when you register at the Chamber of Commerce (KVK), you will receive a KVK number showing that you’re legally registered and formally have a business. In doing so you will also automatically be registered with the Tax Authorities.
While you must charge VAT from your customers and transfer this to the Belastingdienst, in most cases you may also claim back the VAT you paid on costs associated with running your business.
You are an entrepreneur if you work independently and earn an income by doing so. This applies to most entrepreneurs, but if you want to know for sure if you’re eligible for submitting your VAT, just wait for a blue envelope to arrive in your mailbox (which will take approximately two weeks from KVK registration, so it might be a good idea to go and do other stuff in the meantime).
This letter states your VAT number, if you’re eligible for the VAT refund, and also when you have to submit your declaration; monthly or quarterly. For most people quarterly applies.
Now you are ready to do business!
Charging VAT: the rates and exemptions
The VAT you charge depends on the products and services you sell. The general VAT rate is 21% (for commercial services such as consultancy or copywriting). For some goods (food and drinks) and services (e.g. passenger transport or repairing bicycles), the lower rate of 9% applies, or when conducting business in foreign countries outside of the Netherlands it is 0%.
Read more about the so-called tariffs here.
In some cases, you are exempted from VAT and do not have to pay any at the end of each period. Therefore you are not allowed to deduct the VAT you paid while making a purchase. Do you want to know if this applies to you? Read more about the exempted branches and activities here.
Even if you are exempt from VAT it is still smart to keep your administration up to date. You still have to send invoices to customers and being an entrepreneur you will want to have good insight into your finances.
How do I calculate my VAT return?
Monthly or quarterly you report to the Belastingdienst how much VAT you have charged to others, but luckily you don't have to pay the amount in full. Most times the amount of money you pay is less because you can deduct the VAT you paid on business expenses (it’s the VAT stated on your purchase invoices and receipts). Just deduct the VAT you paid from the VAT you received and declare it to the Tax Authorities.
Simple? Not always, and we can help, but more on that below...
VAT return due dates
As stated above, you have to declare your VAT before the deadline based on monthly or quarterly periods. The exact dates when your VAT return (and payment) has to be completed can be found on the website of the Tax Authorities (it’s not available in English yet, but you can just use the translate option on Google Chrome or your device).
If you submit your VAT return every quarter (most common), then you have to keep the end of the quarters in mind (e.g Q1 ends in March). This is the period over which you calculate your return, but you have an extra month after the quarter ends to send your declaration and payment in. Read all about the quarterly VAT return here.
VAT declaration not submitted (on time)
Not submitting your VAT return on time is not the end of the world, but it is also not advised, especially as a new entrepreneur. Not filing your declaration on time comes with a fine of €65, but if you make it a tradition and submit late repeatedly, the tax authorities can increase the fine to €131.
An import hint for new starters: you have to take care of the payment yourself from the first declaration on. You won’t receive a bill at home and must remember to submit directly to the Belastingdienst.
Are you a new starter and did you submit your declaration too late? You might just be in luck. The Tax and Customs Administration can sometimes grant you an extra payment period of 7 calendar days. If you still file a declaration within that period, you can (sometimes, not always) be lucky enough and not receive a fine. The Belastingdienst allows this leniency period to exist, but do not tempt fate and simply send your return on time.
Additionally, you also have to pay after you’ve submitted the declaration. If you submit on time but pay the tax return too late, the Belastingdienst can still charge a fine. If you make both the declaration and the payment late, you can get two fines: one for declaring too late and one for paying too late.
How do I reclaim my Dutch VAT?
That answer is fairly simple: on the website of the Belastingdienst.
Here is a step by step guide:
- Log in on the website.
- When you’re logged in, you’ll see a list of your tax returns and declarations. Answer the questions.
- File your tax return.
Reclaiming your tax (minus the stress)
You’ve been saving all your receipts in your wallet and all your sales invoices in a separate folder... but now what?
Many entrepreneurs feel stressed doing their bookkeeping, mainly because they’re afraid they’ll do something wrong. And for good reason: as a freelancer especially you don't want to miss out on money, pay too much tax, or receive a fine because you’ve missed something.
The solution? You can choose to hire a tax representative or accountant. They’re (hopefully) well trained and can do all the work for you, saving a lot of time and stress. Or on the contrary: the training they did means their time costs a lot of money and therefore hiring someone to do the administration for you can be expensive.
Don’t be surprised if you receive a bill worth hundreds (or even thousands) of euros. Also: you remain responsible for the declaration, even if the bookkeeper does it for you. If your accountant makes a mistake, you’re still the one paying for it (sometimes literally).
Submitting your VAT return, cheap, fast and easy
That’s why Tellow exists. We believe that freelancing is the future of work and can lead to more freedom in life to do what you want, but understand that it can also be very challenging. Doing your VAT is one such aspect of freelancing that is complex, boring, and can also have monetary consequences if done wrong. At Tellow we can help you with this; some of our customers even state that doing their administration becomes fun using our bookkeeping tool.
Automatically generate and send your invoices with Tellow, and track who has paid on time. Scan your receipts by taking a photo in the app on your phone, no more manual entry or spreadsheets. While the receipts are being stored securely, the VAT amounts are read directly from the photo with our algorithms, and the data is imported and immediately added to your VAT overview.
As a result, your VAT declaration is effectively completed for you. If you have a Tellow Compleet subscription, we will automatically send the declaration to the Belastingdienst, because Tellow has an official integration. We will also provide you with advice or help, with an English speaking customer success team.
If you want to feel at ease doing business in the Netherlands and have maximum assurance with your administration, Tellow Compleet is the best option for you.
How do I submit the VAT declaration in Tellow?
Our support team wrote an article on how to prepare your VAT return in Tellow. It’s written in Dutch, so please use the translate option on your device. Let us know if you would like more content in English; we might offer more fitting articles and services for the English speakers out there!