Keeping your international business records in order

When you do business internationally, your administration has to meet legal requirements. You use different VAT rates and put your foreign customer's VAT ID on your invoice. You also keep proof of the export of your goods from the Netherlands. There are different rules for doing business inside or outside the EU. 

VAT in the Digital Age (ViDA)

VAT in the Digital Age is a proposed EU legislation. Its aim is to modernise the VAT system within the EU. The ViDA package includes 3 components:

1. E-invoicing and digital reporting
2. The platform economy
3. Expansion of the One Stop Shop (OSS)

From 2030, e-invoicing between businesses in the EU will be mandatory. This will change the way you invoice and report. Your systems will also need to be able to handle this. This may seem a long way off, but making the necessary changes takes time. Start preparing for this in good time. And consult your accountant or software supplier about what changes you need to make.

Read more about the different components of the ViDA package.

Your business administration inside the EU

If you sell products and services to EU customers, you list your foreign customer's VAT ID on your invoice. You retain proof of the transaction for your VAT return. And if the sales exceed a threshold amount, you file an Intrastat report with Statistics Netherlands (CBS).

VAT ID of foreign customer

There are legal requirements for invoices to Dutch customers. You need these for your VAT administration. For example, name and address of yourself and your customer. And your own VAT id. 

Do you do business with a customer in another EU country? If so, you must also include your customer’s VAT number on the invoice. Always check this number beforehand. That way, you can be sure that your EU customer is a business. 

If you put 0% VAT on your invoice and your customer does not file VAT returns themselves, you will have to pay VAT on the delivery yourself. The Tax Administration will send you an assessment for the amount.

Supplying goods

The supply of products to business customers in other EU countries is called an intra-community transaction (ICP). After you have checked your customer's VAT ID, save a screenshot of this data in your records.

You usually invoice an intra-community transaction with the 0% VAT rate. You state that the delivery is an intra-community transaction. To do so, you include the text:

• ‘Tabel II, onderdeel a, post 6, Wet OB 1968’ (Table II(a), item 6, Turnover Tax Act 1968)
• 'Artikel 138, lid 1, Richtlijn 2006/112’ (Article 138(1), Directive 2006/112).

You decide which of these texts you use, and in which language.

You deliver the goods to other EU countries with 0% VAT. Your customer pays VAT in their own country. There are some exceptions to this. For example, a so-called ABC supply chain. Or if your customer is a private individual, and does not run a business.

Proof

You must be able to prove through your records that you transport goods to another EU country, and that the goods have left the Netherlands. You can prove this by retaining, for example:

• copies of freight bills/letters
• transport declarations for pick-up transactions (in Dutch)
• transport insurance policies

There are rules for applying the 0% VAT tariff in pick-up transactions. Always ask your clients for a transport declaration if they pick up the products themselves. You must keep your VAT records for 7 years (in Dutch). Make sure you can show these records quickly and easily in the event of an audit. 

Selling to private customers

Sometimes you sell products to private individuals. Through your webshop, for example. For these so-called distance sales within the EU, there is a common threshold amount of €10,000. Up to this amount you charge Dutch VAT. Do your total e-commerce sales to other EU countries exceed €10,000? Then you charge your customer the national VAT rate of the EU country. 

Providing services

When you provide services to companies in other EU countries, your customers usually calculate the VAT themselves. They pay this VAT in their own country. You send an invoice without VAT. After checking your client's VAT ID, save a screenshot of the data in your records. 

On your invoice, you state: 'btw verlegd' or 'VAT reverse-charged'. Other languages are also allowed.

For some services, different rules apply, because they are taxed in the country where the services are provided. For example, transport of individuals. This service is taxed in the country where you transport the individuals. The tax laws of that country then apply.

ICP declaration

ICP stands for Intra-community transactions. In addition to your VAT return, you must submit an ICP return at fixed intervals. You do this for each VAT number of your EU customers. Check the VAT numbers carefully before submitting the return. This will help you avoid errors in your return.

Your business administration outside the EU

Invoices for products exported to non-EU countries do not have to contain additional details. You draw up your invoice in a language that your customer understands. You charge 0% VAT.

Do you provide services to countries outside the EU? If so, you will often charge VAT at the rate applicable in your customer’s country. The rules on VAT and invoicing vary from one EU country to another.

The Tax Administration offers a (Dutch only) tool: ‘Diensten in en uit het buitenland’ (Services to and from abroad). This helps you find out what you have to put in your invoice in which country, and where to file your VAT tax return. 

Proof

You should keep records of your exports and imports in your accounts. In the event of an audit by the Tax Administration, these records will allow you to demonstrate that the goods were actually exported or imported.

Proof of export

You can use several documents to prove the export of goods from the Netherlands. The most common ones are:

• Customs documents you receive from Customs or your forwarding company. For example, the Confirmation of Exit (CoE): digital proof that your goods have left the EU.
• Correspondence with your foreign customer, like quotations and emails.
• Copies of transport documents.

Import proof

When you import products, you do not make invoices, but receive them from your foreign suppliers. You do retain proof in your records (in Dutch), such as:

• Your custom broker's invoice.
• Customs documents you receive from Customs, like the confirmation of your digital import declaration.
• Copies of signed freight letters.

Read more about your administrative duties when doing business outside the EU on the Tax Administration's website (in Dutch).  

Electronic invoices

Electronic invoices are also known as e-invoices. You create and send them using your accounting software. They are sent via a secure connection, so you can be sure the invoice reaches your customer safely. A PDF is not an e-invoice. 

An increasing number of EU member states are making e-invoicing mandatory for government contracts, or B2G transactions. This is already the case in countries such as the Netherlands, Italy, Poland, and Spain.

New rules for the ViDA package

From 2025, EU countries will also be permitted to make e-invoicing mandatory for domestic B2B and B2C transactions. This does not require authorisation from the European Commission. The condition is that these measures apply only to taxable businesses within their own country.

From 1 July 2030, e-invoicing will be mandatory for B2B transactions within the EU for businesses with a VAT number. This also applies to the reverse charge mechanism between EU countries. The aim is to establish a single European approach. Member states may sometimes permit a different model. Ensure you are aware of which rules apply in which country.

You must send the e-invoice within 10 days of delivery. The supplier reports the transaction digitally to their national tax authority. This digital reporting replaces the ICP declaration. The customer reports the same transaction within 5 days of receiving the e-invoice.

Peppol is the system used by the Dutch government for e-invoicing. It is managed by the Dutch Peppol Authority (NPa). The NPa falls under the Ministry of the Interior and Kingdom Relations (BZK).

Do you do business with customers in countries outside the EU? If so, ask your customer if you may send an e-invoice and how this should be done.

Keeping track of your international records

Accounting software helps you keep track of your international accounts. You can store all your invoices in one place. It also gives you a quick overview of your international customers, suppliers and VAT categories.

You should therefore create separate general ledger accounts. This will give you a clearer picture of where your income and expenditure are coming from.

General ledger account

A general ledger account is a category in your accounts. It contains all the income and expenditure relating to a specific area. For example, your turnover. You use account numbers to organise your accounts.

This helps you keep track of things. You can quickly see what business you’re conducting in the Netherlands, the EU or elsewhere. The tax authorities want to be able to see this clearly during an audit.

Example

€‎8,000 Turnover domestic
€‎8,100 Turnover inside the EU
€‎8,200 Turnover outside the EU

Your accountant or software supplier can help you partition your ledger accounts.

Diligence and good faith

If you are audited by the Tax Administration, it is important you can show diligence and good faith. This means, for example, that you:

• Check details of new foreign customers and suppliers.
• Check VAT IDs in VIES on time. 
• Can show you keep up-to-date details in your records and do not collect them afterwards. 

Did your foreign customer fail to supply a VAT ID? Then invoice them with Dutch VAT. This will help prevent possible problems in the event of an audit.