Online purchases as a business: do not miss out on VAT

Buy online without giving your VAT number and the seller charges you 21% Dutch VAT that you cannot deduct. An unnecessary cost that is almost impossible to put right afterwards.

Businesses increasingly buy goods and services for their business online. Whether it is advertising services, software, cloud storage or hardware such as laptops, webshops and online platforms target the business market too. We often hear that the bookkeeper or accountant is only told after the purchase, that 21% Dutch VAT has been charged, and that the question then arises whether that VAT is deductible.

Digital services

Where you buy a digital service, it is taxed in the country in which you as the customer are established, here the Netherlands. Where you are a business, the reverse charge applies and the liability for 21% Dutch VAT is shifted to you.

Where you buy an advertising service from Google, for instance, without indicating that you are a business and without giving your VAT number, Google charges 21% Dutch VAT. It assumes you are a private individual and accounts for that VAT through its OSS return or Dutch registration. Unfortunately you may not then deduct that VAT, because the reverse charge should have applied and you therefore do not hold a correct invoice. The VAT becomes an unnecessary cost, whereas reverse-charged VAT would have been deductible.

Goods

Where you buy goods online, for instance a laptop coming from another member state, 21% Dutch VAT is often likewise charged and accounted for through OSS or a Dutch registration, on the assumption that you are a private individual. That VAT is not deductible either: the distance sales rules apply only to sales to private individuals.

Where you buy the laptop as a taxable person and give your VAT number, the seller applies the zero rate for an intra-Community supply. You then declare an intra-Community acquisition and deduct that VAT again in the same return. That way you do get a deduction.

In short

Buy goods and services as a business and give your VAT number when you do. At the point of ordering that is usually possible, but afterwards it is very hard to correct with webshops and platforms, leaving you with VAT as a real cost.