Netherlands: Reverse-charge for sale of certain IT hardware and mobile phone devices

From 1 April 2013, business involved in supplying large quantities of certain IT hardware and mobile devices (e.g. mobile phones, tablets, laptops, game consoles, integrated circuit devices…) in the Netherlands must no longer charge Dutch VAT on their invoices to other businesses.

From this date on, if the total value of any single local supply of these goods is EUR 10.000 or more, the “reverse-charge mechanism” will be applicable. This means that the purchaser has to self-account for VAT on the transaction in his own VAT return. If the business customer is entitled to full input VAT recovery, a simultaneous input VAT recovery can be made in the same VAT return, so that there is not VAT payment liability is attached to the transaction. A further requirement is that a reference must be included in such invoices that VAT is subject to “reverse-charge mechanism”.

The change is based on a Council Decision of the European Union that will expire on 31 December 2013 that allows the Netherlands to extend the “reverse-charge mechanism” to certain local supplies of goods, in order to prevent possible VAT fraud.

For more information you can visit the Dutch authorities’ website, or you can read the unofficial English translation here.

What does this mean for you?

If your business is not established in the Netherlands but purchases such goods from a Dutch supplier, you may well have a VAT registration obligation in the country.

On the other hand, if your business is selling such devices to Dutch customers, you will have to adjust your ERP systems accordingly. As special challenge might be to comply with the EUR 10.000 threshold (however, we understand, that the Dutch tax authorities might be willing to discuss this issue in some cases).

As businesses have time only until 1 April 2013 to adjust their ERP systems and their invoice templates to reflect these changes, we strongly recommend prioritizing this matter and making the required system configuration adjustments.

About Andras Salanki

Manager PwC Switzerland email: andras.salanki@ch.pwc.com Office: +41587924536

Andras Salanki is an international VAT advisor with 7 years of relevant professional experience. He spent one year on secondment in California, US, where he advised US multinationals on global VAT projects and also gained experience with IT and Internet companies based in the Silicon Valley.