VAT is essentially a neutral, harmonized consumption tax that provides stable revenues for governments. The terms “VAT” and “turnover tax” refer to the same levy. In principle, VAT should only be borne by the final consumer, but it is levied from business in the chain, hence the name ‘indirect tax’. Businesses in the chain should, in so far they engage in VAT taxable activities, not face a VAT burden.

The Dutch VAT Act is aligned with overarching European law (the EU VAT Directive), which aims for harmonized application across Member States, ensuring a level playing field within the EU internal market.

The importance of VAT cannot be overstated: it is one of the largest sources of tax revenue in the Netherlands and the EU. As a result, strict compliance is expected. Yet this is not always straightforward—rules differ across jurisdictions, and cross-border errors can easily lead to double taxation or denied deductions.

• Financial impact for businesses - Incorrect VAT treatment can result in assessments, denial of input VAT, penalties, interest, and additional costs. Timely settlement of VAT and full use of input VAT rights prevents unnecessary cash flow strain.

• Being in control - VAT compliance is essential to avoid financial and reputational risks, ensuring smooth operations and trust from tax authorities and business partners.