VAT-items in Dutch 2009 Budget Statement

18 September 2009

Summary

On 15 September 2009, the Dutch government published the 2010 Tax Package which reflect the Dutch government’s policy to stimulate and to accommodate entrepreneurship. The specific VAT measures include amendments to the exemptions for education and youth welfare work, extension of the application of the reduced VAT rate and abolishment of the so-called ‘Mededeling 26’ regarding the possibility to opt out of the internal supply when building on your own land.

Full article

On 15 September 2009, the Dutch government published the 2010 Tax Package which reflect the Dutch government’s policy to stimulate and to accommodate entrepreneurship. The government’s main focus points are:

  • stimulation of innovative entrepreneurship,
  • boosting the cash flow for businesses with regard to the economic crisis, and
  • liberalisation of the participation exemption regime.

Most proposals included in the 2010 Tax Package will take effect on 1 January 2010.
 
The specific VAT measures include amendments to the exemptions for education and youth welfare work, extension of the application of the reduced VAT rate and abolishment of the so-called ‘Mededeling 26’ regarding the possibility to opt out of the internal supply when building on your own land.
 
Internal supply (‘Mededeling 26’)
One of the most striking VAT measures proposed in the 2010 tax plans is the cancellation of Decision 26 that allows certain taxable persons in appointed sectors to opt out of the ‘internal supply’ on the condition that no input VAT is deducted. This measure is significant for housing corporations, hospitals, nursing homes and pension funds that rent out real estate. Educational institutions can opt out of the internal supply but based on a different Decree. Whether that Decree will also be withdrawn is not clear yet.
 
A transitional measure is announced but has not been published yet. It is expected that the transitional measure will include provisions for taxable persons owning land that they purchased VAT exempt but paying real estate transfer tax. The scope of the transitional measure is still debated with the sectors involved and the European Commission.
 
Reduced VAT rate (6%)
For a number of supplies, the application of the reduced rate is proposed. These include:

  • painting and plastering of buildings older than 2 years (currently 15 years) - a Decree was published allowing the application of this lower rate as from 15 September 2009;
  • performing cleaning activities in residential homes;
  • supplying digital information on physical carriers e.g. audio books and digital educative information used for public education;
  • transport services provided by “tuk-tuks”, motor taxi’s and bike taxi’s.

VAT exemptions
The VAT exemption for educational services will be amended insofar as it concerns vocational training, in order to comply with the EU VAT Directive. The plans include an exemption for non legally recognized vocational training by registered institutes and certain appointed institutes which are publicly funded.
 
Application of the exemption for youth welfare work will no longer be subject to the requirement of non-profit and will include the supply of food and beverages within the framework of the exemption.
 
Please note that these measures are still proposals which have to be approved by parliament.
 
Additional comment
The real estate transfer tax exemption for the acquisition of monuments will be completely withdrawn.
 
Source: Tax Package 2010, 15 September 2009 (‘Belastingplan 2010’ and ‘Overige Fiscale Maatregelen 2010’).