All about VAT and international business

In this article, you can read how to apply the VAT (Value Added Tax) rules if you do business internationally. VAT terminology often encountered when doing business abroad is also explained, including the one-stop-shop system OSS, ICP, and VIES. VAT is known as BTW in the Netherlands.

• VAT identification number
• KOR
• Exporting goods
• Importing goods
• Providing services abroad
• ICP declaration
• A-B-C supply chain transaction
• Claiming a VAT refund
• Deliveries to private cosumers
• VIES website

VAT in the Digital Age 

VAT in the Digital Age, (ViDA) is a set of EU regulations aiming to modernise the VAT system in the EU. It was adopted in 2025 and the rules are being introduced step-by-step. 

ViDA has 3 main components:

1. e-invoicing and digital reporting
2. platform economy
3. single VAT registration; VAT registration in other countries is no longer necessary thanks to the expansion of the One-Stop Shop (OSS scheme).

Read more about the ViDA package and what it means for you on the website of the European Commission.

VAT identification number

Each company gets a VAT identification number from the Belastingdienst (Netherlands Tax Administration). It is a unique number that belongs to your company. You use this ‘VAT ID’ for transactions with customers and suppliers in the Netherlands and other EU countries. You state this number on your invoices. Do you sell products online? Then clearly state your VAT ID on your website. That way, customers can be sure that they are dealing with a company, not a private person.

Small businesses scheme (KOR)

If you use the Kleineondernemersregeling (KOR small businesses scheme), you are exempt from paying VAT. You do not charge VAT on your goods or services. Nor may you deduct the VAT on expenses as input tax. AThis is also the case when you do business abroad.

Do you have foreign purchases and sales where the VAT is reverse-charged? Then you are responsible for declaring and paying the VAT yourself. You do this through a sales tax return. Read more about this on the website of the Tax Administration (in Dutch).

EU-KOR

Since 1 January 2025, you can use the small business scheme in other EU countries. This scheme is called the EU-KOR. It gives you a VAT exemption if you do business in the EU. The scheme is voluntary. You decide whether to use the scheme and in which countries. You do not need to use the Dutch KOR to use the EU-KOR.

Exporting goods

When exporting goods to customers within or outside the EU, you need to know if your customer is an entrepreneur. Meaning, do they have a VAT identification number? You are not allowed to charge Dutch VAT to every foreign customer. In some situations, you need to file a VAT return in the EU country of your customer.

Deliveries to EU countries (intra-Community deliveries)

The following example demonstrates how to apply the VAT rules when you are delivering goods within the EU. You do not call this export but intra-Community delivery.

Example:

The Dutch company X develops, produces, and supplies products for soil and water research worldwide. X delivers a shipment of soil drills to an Italian customer. A transportation company transports the shipment.

On their invoice for this delivery of goods, company X states ‘0% VAT’. Their customer declares the VAT in Italy. On the invoice, X includes their VAT identification number, and that of their customer. Because the company invoices with 0% VAT, they must comply with additional invoicing requirements. 

Company X reports this in its VAT return under item 3b; leveringen naar of diensten in landen binnen de EU (supplies to or services in countries within the EU). Here X enters the Italian customer's turnover amount. Company X thus makes an intra-Community supply (intracommunautaire levering, ICS) and also reports the supply in a declaration of intra-Community transactions, a CPI. 

Exceptions

There are exceptions (in Dutch) to the 0% VAT rule for specific goods and in special circumstances. For example, if your customer is not an entrepreneur. Or if your European customer asks you to deliver the goods in the Netherlands. Then the goods remain in the Netherlands. The Tax Administration regards this as a domestic delivery. You invoice your foreign customer with Dutch VAT.

Deliveries to non-EU countries

The following example demonstrates how to apply the VAT rules when you are supplying goods to a country outside the EU.

Example:

Company X has a customer in China. On their invoices to this customer, company X charges 0% VAT. In case of a tax audit, X should use their records to prove that the goods they delivered have left the EU. They can use, for example, an export document from customs, transport documents, and proof of payment. The company files the turnover of this and other deliveries to countries outside the EU in their tax return under item 3b; leveringen naar of diensten in landen buiten de EU, uitvoer (Supplies to non-EU countries, export).

For exports it makes no difference whether your customer is a company or a private person, For a private person living outside the EU who collects the goods at your business and transports them in their personal luggage to their own country special rules apply (in Dutch).

Do your foreign customers collect their goods? 

Sometimes, foreign customers have a shipment collected. In that case, you also need evidence to prove that these goods have left the Netherlands. So, always have your client sign a transport declaration (in Dutch) as proof. This is also known as a collection declaration. With this declaration and your records regarding the supply in question, you can prove that the goods have been delivered to a customer in another country.

You may use a collection declaration only with regular buyers. And it can only be used if the customer or their employee collects the goods. Does a third party collect the goods, such as a carrier? Then make sure you also have a signed CMR document in your administration. Agree this in advance with your customer. If in doubt, charge Dutch VAT. Your foreign customer will reclaim the VAT paid via the Netherlands Tax Administration.

Are you unable to prove that the products have left the Netherlands in the event of an inspection? Then you will have to pay VAT via an additional levy. You can also be fined. 

Importing goods

Do you buy goods from a foreign supplier? You often receive an invoice with 0% VAT. In that case, you calculate the VAT yourself, and declare this in your VAT return.

Intra-community acquisition

The following example demonstrates how to apply the VAT rules when you are buying goods from countries within the EU.

Example

Company X buys measuring equipment for groundwater monitoring in Germany. X has a Dutch VAT ID and the German supplier manages transport to the Netherlands. X receives an invoice with 0% VAT from Germany. With this purchase, X performs an intra-Community acquisition (ICA).

In the Netherlands, the measuring equipment is subject to Dutch VAT. Company X declares VAT under item 4b; leveringen/diensten uit landen binnen de EU (Supplies/services from EU countries). In their tax return, X declares under omzet (turnover) the purchase amount stated on the invoice. X calculates the turnover tax of 9% or 21% over this amount and enters this under omzetbelasting (turnover tax). Then X enters the VAT amounts under item 4b in item 5b; voorbelasting (input tax). This means that, on balance, X does not pay any VAT on their purchase.

Buying from non-EU countries

Company X buys observation wells in Japan. The import of the observation wells is taxed in the country where the shipment enters the EU. The moment X files an import declaration with Customs, they receive an invoice from Japan with no VAT. Generally, Customs calculates VAT on import on the customs value plus import duties and levies. The customs value consists of:

• the purchase price of the goods; plus
• the incidental expenses up to the place of destination within the EU (commission, packaging, transport, and insurance); plus

An example of the the taxes and levies that apply to imports is import duties. VAT on imports is not inculded in these taxes.

The company has all goods enter the Netherlands and pays VAT immediately on import. X is entitled to VAT deduction and enters the VAT they paid in their VAT return under item 5b; voorbelasting in de btw-aangifte (input tax). On balance, the company does not pay VAT on this purchase, but it has to pay it first to get it back later. It is similar to your purchases in the Netherlands (in Dutch).

Apply for an Article 23 permit

Company X imports products on a regular basis. So Company X applies for an Article 23 permit from the Tax Administration. With this article 23, the company can reverse-charge the VAT in their VAT return and immediately deduct it as input tax. This means X does not have to pay the VAT up front.

So, the company files the import declaration with Customs, but does not pay the VAT at that moment. Company X calculates the VAT on the purchase value themselves and declares this amount under item 4a; leveringen/diensten uit landen buiten de EU (supplies/services from non-EU countries). Company X deducts the calculated VAT as input tax under 5b. On balance, they do not pay anything.

This is called the verleggingsregeling (reverse-charge arrangement).

Providing services abroad

If you provide services to foreign companies, you are usually allowed to transfer VAT to your customers. They then calculate the local VAT themselves and pay it in their own country. When providing services to foreign consumers or organisations without a VAT ID, it does not matter whether your customers are located in another EU country or outside the EU.

Reverse-charging VAT

In the reverse-charge arrangement, you as the supplier transfer the VAT to your customer. For services provided, you send customers in other EU countries an invoice without VAT. Your customers pay the VAT in their own country. Or you receive an invoice from an EU service provider with the text 'VAT reverse-charged'. Then you are responsible for declaring the VAT in the Netherlands.

The reverse charge of VAT and how you declare this in your VAT return are explained below with some examples.

Services to companies in other EU countries

A Dutch photographer takes pictures for a German company. In their invoice, they reverse-charge the VAT to their German customer, who subsequently files the VAT return in Germany. On the invoice, the photographer states their own VAT identification number and that of their customer. Additionally, they include on the invoice: Steuerschuldnerschaft des Leistungsempfängers. The Dutch text for the reverse charge is btw verlegd. In English it is ‘reverse charge’. Before doing so, the photographer checks the VAT ID of their German customer on the VIES website of the European Commission. This way, they know for sure that they are actually dealing with an entrepreneur.

In their VAT return, the photographer enters the turnover amount to their German customer under item 3b; leveringen naar of diensten in landen binnen de EU (supplies to or services in EU countries). In this situation, the photographer performs an intra-Community supply (ICS) and should also declare the service in their ICP declaration.

For certain services there are exceptions (in Dutch). For example, transport of passengers, restaurant and catering services, or working on property abroad. The tax authorities in the other EU Member State determines whether you are allowed to reverse-charge VAT to your customer or whether you need to charge the VAT of that country. In the latter situation, you are required to register with the foreign tax authority.

Purchasing services in other EU countries

The photographer uses packaged software from a French supplier to edit their digital photos. Each month, they receive an invoice from this supplier with the statement Autoliquidation de la TVA. They have to declare the VAT on this invoice in the Netherlands. They do so under item4b; levering/diensten uit landen binnen de EU (supplies/services from EU countries).

They state the invoice amount under omzet (turnover). They calculate the turnover tax (9% or 21%) on the entered amount and state this under omzetbelasting (turnover tax). The photographer can deduct VAT paid on the goods or services they purchased professionally as input tax under 5b. This is including the amounts stated as turnover tax under 4b. On balance, they do not pay any VAT.

Services provided to companies outside the EU

Occasionally, the photographer takes pictures for a Swiss company. In that case, they provide a service to a company outside the EU and the Swiss VAT legislation applies. The photographer sends an invoice without Dutch VAT. They ask the Swiss tax authority if and how they must file a tax return. They do not file the services to the Swiss company in their Dutch VAT return. 

Services provided by companies outside the EU

In busy times, the photographer employs the services of an Indian company to edit their pictures. From India they receive an invoice without VAT. In that case, the photographer is responsible for filing the VAT return in the Netherlands. They do so under item 4a; leveringen/diensten uit landen buiten de EU supplies/services from non-EU countries). They calculate the VAT on the invoice amount and deduct the VAT as input tax under 5b. On balance, they do not pay any VAT.

Offsetting VAT is only possible if you are entitled to deduct VAT. You do not include services exempt from VAT in the Netherlands or with a 0% VAT rate in your VAT tax return.

Services provided to consumers

Occasionally, the photographer takes pictures for private persons or organisations that do not have a VAT ID and charges Dutch VAT on the invoice. They then declare this in their VAT return under item 1 prestaties binnenland (domestic activities). In this situation, whether you are providing a service to a customer within or outside the EU is irrelevant. However, you should use the Tax Administration's tool (in Dutch) to verify if there are any exceptions to this rule.

Digital services

Different rules apply for digital services such as telecommunications, broadcasting, and electronic services. These services are taxed in the country where your customer lives or is registered. Whether your customer is a private person or an entrepreneur is irrelevant. 

ICP declaration

As well as your VAT return, you periodically file an intra-Community supply declaration (ICP). In this declaration, you list the supply of goods and services. The total amount matches the amount entered under 3b of your VAT return.

You submit the ICP declaration through the portal Mijn Belastingdienst Zakelijk under overige formulieren (other forms). Or with your own tax return or accounting software.

ICP (intracommunautaire prestatie) stands for intracommunity supply. For supplies to businesses in another EU country, you use the 0% rate. For the provision of services, you reverse charge VAT to your business customer in the other EU Member State. In both cases, you are making an intra-Community supply.

A-B-C supply chain transaction

An A-B-C supply chain transaction (A-B-C-levering) involves at least 3 businesses from different EU Member States.

Example

Entrepreneur A from the Netherlands sells water silos to company B in Belgium. Company B sells the silos on to entrepreneur C in Germany. Company B commissions A to transfer the shipment directly to C in Germany. The transport to Germany is therefore part of the supply from A to B.

An ABC supply chain transaction has 2 deliveries subject to VAT. As of 2020, the Tax Administration sees the delivery from A to B as an intra-Community delivery. There is, after all, 1 physical delivery to another EU Member State. The transport is part of that delivery. Entrepreneur A sends an invoice with 0% VAT to B in Belgium. B must register for VAT purposes in Germany and declares his intra-Community acquisition.

The Tax Administration sees the second delivery from B to C as ‘domestic/internal delivery’ in Germany. The water silos have been delivered in Germany by A and they stay there. There is no delivery of the actual goods between B and C, in this case there is only a transaction on paper. B charges the German VAT to C and declares their turnover in their VAT return.

Exception to the general rule

There is 1 exception to this general rule. If company B organises the transport itself or contracts it out to a carrier and provides company A with a VAT ID of the Member State of departure. Company A can then send an invoice with Dutch VAT. In that case, the supply from A to B is considered a domestic delivery in the Netherlands.

The supply from B to C is then considered intra-Community supply and can be invoiced with 0% VAT. When B provides A with a VAT ID from a Member State other than the Member State from which the goods were shipped, the general rule of an A-B-C transaction applies again.

Simplified A-B-C scheme

To make things easier for intermediary B, the simplified A-B-C supply chain transaction can be applied. With this scheme, the A-B-C supply chain transaction can be done without the need to register in the country of arrival of entrepreneur C (Germany). On the invoice, B states: "VAT reverse-charged".

You must meet certain conditions to apply the simplified A-B-C rules. The website of the Customs Administration of the Netherlands information about the conditions and also more information about A-B-C supply chain transactions.

A-B-C transactions to non-EU countries

In general, you can use the 0% rate if you have a written export order from your buyer. If your delivery is part of an A-B-C supply chain transaction to a country outside the EU (in Dutch), you should discuss with your financial adviser what you need to do about the VAT.

Claiming a refund for foreign VAT paid

Sometimes you pay VAT in another EU Member State. For example, when renting a car, paying for hotel accommodation, or buying goods or services when taking part in a trade fair in another EU country. You can reclaim VAT paid in other EU member states online with the Tax Administration. Conditions apply:

Conditions

There are 3 conditions that apply for claiming a refund of VAT:

1. Your company is established in the Netherlands.
2. You do not file VAT returns in the other EU Member State.
3. You are using the goods or services you buy for business activities subject to VAT. These activities should not be exempt from VAT.

Filing a VAT return

If you want to reclaim VAT from the previous year, you must do this before 1 October in the current calendar year. So you must reclaim VAT paid in 2025 before 1 October 2026. Applications received after this date, may not be handled by another EU country. 

In the application for reclaiming, you include your business activities. In the Netherlands, you use the standard industrial classification coding system (SBI). To reclaim VAT from another EU Member State you use the NACE code (in Dutch). These codes and more information about how to request login details and submit your application can be found on the website of the Tax Administration (in Dutch).

VAT that you paid in a non-EU country cannot be reclaimed through the Netherlands Tax Administration. In that case, you check with the tax authority abroad if and how you can reclaim the VAT in that country.

Deliveries to private consumers

It is possible that you are doing business with private customers in another EU Member State who do not file VAT returns because they have no VAT ID. Normally, you would charge the VAT from the country of your customer. This situation occurs, for example, when you sell products from your online shop. The Tax Administration calls this afstandsverkopen (distance sales).

Threshold amount for distance sales

Is your total annual amount of intra-EU sales to consumers below the threshold of €10,000? Then you are allowed to charge Dutch VAT. Are your sales above this amount? Then you send your foreign private customer an invoice with the local VAT rate of their EU country, 

This type of sale often refers to sales through an online shop. Using the local rate also applies to telesales to foreign consumers in another EU country.

There are 2 ways to file your foreign VAT returns:

• apply locally for a VAT number and file your VAT return locally, or
• register your business for the Union scheme within the Tax Administration's One Stop Shop system (OSS). The Tax Administration will then pay the VAT to the EU country in question.

Read more about distance sales on the Tax Administration's website. 

Dropshipping

If you have an online store you can use dropshipping. With dropshipping, your customer orders a product from your online store. Next, you forward this order to your foreign supplier. Your supplier sends the order from another country directly to your client. There are several possible situations. Both your supplier and the customer may be located abroad. In that case, you may have to  follow foreign VAT rules. 

Non-EU countries

If you send products to customers outside the EU you charge 0% VAT. You do not owe Dutch VAT. However, you do include the turnover in your VAT return. You do this under item 3a; leveringen naar landen buiten de EU (uitvoer) (deliveries to countries outside the EU (export)).  

In-store sales

Do you sell products in your shop to consumers living outside the EU? And do they take these products back to their home country in their luggage? Since 1 January 2026, the rules for VAT refunds on these products have changed. If you offer customers a VAT refund, this can only be done digitally. You can find more information about this digital process on the Customs Administration website (in Dutch). 

VIES website

Before you apply the 0% VAT rate or reverse-charge the VAT to your customer in another EU country, you verify the VAT ID of your buyer. You need to make sure that you have a valid VAT ID for your customer. You can do this on the European Commission's VIES website. Here you verify the validity of VAT numbers in all Member States.

If the number is incorrect, you see the notification ‘Invalid input’ or ‘No, invalid VAT number for cross-border transactions within the EU’. You should then notify your customer that you must charge Dutch VAT, because their number is invalid.