As of the beginning of next year the lower VAT rate will be raised from 6% to 9% in The Netherlands. This has several consequences that should be anticipated by businesses in advance of the increase. Examples include the implementation of possible price increases or necessary adjustments to administrative procedures.
The increase in the lower rate of VAT applies to essential supplies such as food and beverages as well as books and magazines. Some services are also included, such as hairdressing, shoe repairs and bicycle maintenance. Other affected services include hotel stays, sauna visits and public transport.
The consumer price for these goods could be increased by 3% due to the planned VAT increase. (109/106 = 2.8).
If you sell one or more of these products or services, you will more than likely need to adjust your prices. Just like other businesses, you will need to take this inflation into account in your new prices as of 1st January 2019.
Your administrative procedures will also have to adjust to these changes. Your bookkeeping records should show the quantity of goods and services that you currently sell at the lower VAT rate and what consequences this increase will have on your VAT payments. The same will apply to your purchases to which the lower VAT rate applies, and the subsequent deductions.
The VAT increase will need to be reflected in your invoicing, to ensure that the correct VAT rate is always calculated. Accidentally applying the incorrect rate to invoices causes your company an extra tax burden.
No additional tax on previous invoices
Have you already sent invoices for goods and services that will be supplied in 2019? It is not necessary to pay the difference between the old and new VAT rates. There is also no need to adjust your administration for this, or to send new invoices.
Warning! The increased VAT rate will need to be applied to all your proposals for relevant products or services that will be provided after January 1st 2019.