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Telecommunications services in the Netherlands to charge VAT to end-users only

Due to the recently detected VAT (carousel) fraud in telecommunications services, the government of the Netherlands agreed upon a regulation that allows telecommunications services rendered in the Netherlands to charge turnover tax (VAT) to end-users only. This amendment has been published in the Dutch state-court (Koninklijke Nederlandse Staatscourant) on the 1st of June.

Why this amendment?

In the case of customers of telecommunications services, there is increasing uncertainty about the right to deduct VAT. This is caused by the possibility of VAT carousel fraud. For this, there is reason to approve that a repayment scheme can be applied to the provision of telecommunications services that take place in the Netherlands between companies performing these services.

What will change for the customers of Highside?

This amendment only contribute to our wholesale clients that do not ‘use’ the product we sell themselves, but are trading our products to others. For our wholesale clients we’ll apply the 0% VAT rate.

What is VAT carousel fraud?

VAT carousel fraud is done when a company imports goods that are VAT-zero-rated in the country of origin, and VAT on the goods should be paid in the country where they have been imported. After importing, the company sells the goods to another company and changes the price of the goods plus VAT, but doesn’t pass on the VAT to the Government. The buyer which has paid the VAT, can deduct the same VAT amount on his VAT return. Afterwards, the goods will be exported again and will be zero-rated for export. This can repeat many times, with the goods going round in a ‘carousel’.

 

If you’ve any further questions, please contact us.

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