Polish handyman taxed in Poland?

handyman taxed in Poland?

The place where a company is taxed depends on where the owner or managing director of this company is a tax resident. Or is it, thought this handyman taxed in Poland.

Handy man taxed in Poland?

A person is a tax resident in the country where he or she has its central point of life. That is how article 4 of every tax treaty states it, more or less. What is your central point of life? Your central point of life is where you work, sleep, buy your groceries.

However there are some exceptions. One of them is when you own your home in the Netherlands. Your tax partner does stay there but you are working and sleeping in another country. In that case you remained a Dutch tax resident as well.

The Polish handy man taxed in Poland? – court case

A Polish handy man owns a Dutch company registered with the Dutch Chamber of Commerce. The Dutch tax office does an audit with the company. The result of this audit is for the years 2013 and 2014: additional income tax, additional value added tax, penalties and interest is to be paid.

The Polish handy man argued that he is not at all a Dutch tax resident. He lives with his wife and children in Poland.  Actually his coworker, not employed by him, not partner in the company, in this case called Mr Y, is the owner of the company. The Polish handy man is only on paper the owner, but Mr Y is the true owner as he can speak Dutch.

Mr Y has done all the administrative transactions, opened a bank account for the company, obtained the Value Added Tax number, signed the contracts. All things the Polish handy man states he cannot do as he cannot speak, read or write Dutch.

Polsh handyman taxed in Poland?

The court ruled that the Polish handy man was owner of and running the Dutch company. Mr Y was indeed on contracts, but Mr Y should be seen as intermediary, contact person. Not the actual entrepreneur. The court did not believe Mr Y opened a bank account in name of the company of the Polish handy man as the checks and balances in this procedure does not permit that. The same with the application of the VAT number.

The Polish handy man was therefore liable for the results of the audit.

Tax is Exciting

We think tax is exciting. With respect to the court case: you cannot run a company in the Netherlands if you are not a Dutch tax resident.

This question is asked to us so many times per week. I think that is caused by the fact that the Netherlands is labelled as a tax heaven in the world. But everybody that lives, works and pays tax in the Netherlands knows it is not heaven at all.

simplified ABC transactions in the EU

ABC transactions

This is an simplified ABC transactions story that is not that simple. How to treat the VAT when the factory supplies the ultimate client directly, passing by the middle man.

Simplified ABC transactions

The simplified ABC transactions stands for the following situation. You sold goods to a client. This product is not created by yourself. You purchase the product from a factory or wholesaler. This factory or wholesaler offers to send the goods directly to your client. This is convenient and challenging from a VAT (Value Added Tax) point of view.

Example:

You sell car wheels in the Netherlands, manufactured in Poland. Suddenly you receive a large order from Portugal for about 200 wheels. The Polish manufacturer offers to send them directly to Portugal.

The invoice flow goes from Poland to the Netherlands and the Netherlands invoices Portugal. The 0% VAT rate only applies when the administration carries documents of the goods actually being transported to the other country. That document the Dutch seller does not have, as the goods never arrived in the Netherlands. Let alone were transported to Portugal from the Netherlands.

Can 0% VAT be applied by the Dutch seller who has not transported the goods?

The ABC VAT transaction rules do provide the 0% VAT rate, even though no goods were shipped by the middle man (letter B).

How do you process this transaction?

Following the example, the Dutch seller will receive an invoice from the Polish manufacturer with 0% VAT. The 0% purchase you report in your Dutch VAT return as a regular 21% purchase from within the EU. Then in the same form you claim 21% reclaimable VAT for this purchase. That makes the transaction from Poland is on a zero VAT level.

The sale from the Netherlands to Portugal is a so called ICP transaction for you. The condition is you state the valid EU VAT ID of the Portuguese company on your invoice. And you meet all other VAT invoice requirements. Then you can charge 0% VAT on this invoice to Portugal.

Conditions for applying the scheme

If you apply the simplified ABC scheme, you have fewer obligations. No need to register in your customer’s country if you are the intermediary company B for the ABC deliveries within the EU. The following conditions need to be met:

– You can prove that you bought the goods from company A with the aim of selling them on to company C. You can prove this, for example, with a contract or a quote.
– There are 3 companies that each have a VAT identification number in a different EU country.
– You make an agreement with company A about the transport of the goods.
– Goods go from company A directly to company C in company C’s country.
– You are not registered in the country of company C.
– You include your delivery within Europe to company C in your VAT return and ICP form.

Difference simplified ABC delivery compared to a regular ABC transaction

The transport in this non simplified ABC transaction is crucial. When you perform a non-simplified ABC invoice flow and for some reason the goods were directly shipped from A to C, then this will have significant issues for B in the process. The 0% VAT reported in the example in Portugal is only possible when there are shipping documents in name of B.

The registration in country C is also an inconvenience. This is solved in the simplified ABC transaction. However, if you are already registered in the C country, Portugal in the example. Then you cannot apply the simplified ABC transaction scheme.

Additional requirements for your invoice

If you are the intermediary company B for an ABC delivery, when applying the simplified ABC scheme, in addition to the normal requirements for an invoice, you must state the following additional information on your sales invoice to company C:
1) Your own VAT identification number.
2) Company C’s VAT identification number in the country where Company C is located.
3) The statement ‘reverse charge, simplified ABC scheme’ on the sales invoice to company C.

With this you inform customer C that he must declare the VAT, because you used the simplified ABC scheme.

Tax is exciting

We think tax is exciting. My name is Anthony and I am part of the accounting team within the company. My interest is with Value Added Tax returns and its challenges. Feel free to contact me at anthony@orangetax.nl for questions you might have about VAT transaction in the European Union.

Correction VAT return is obligatory

Correction VAT return or in Dutch: Suppletie aangifte BTW is an obligation. The obligation occurs when not the correct amount of VAT has been reported for a year.

Correction VAT return

The Value Added Tax (VAT) system is a closed circuit. The VAT is in the end paid by the private consumer or the company not being a VAT entrepreneur.

Example. You charge EUR 100 plus EUR 21 VAT to a client. That client is a company and receives your EUR 121 invoice. You need to pay EUR 21 to the Dutch tax office, your client claims from the Dutch tax office EUR 21. In the end you earned EUR 100, the client paid EUR 100 and the tax office had a neutral transaction.

This example shows the importance from the tax office perspective for everybody to report correctly the VAT. To help companies filing the correct VAT return, penalties have been put in place.

VAT audit - court case
VAT audit – court case

Update VAT return

Officially if you file a quarterly VAT return and you report an item in the wrong quarter, that is already a correction you need to make. Practically within the calendar year you can make this correction in the next quarter. During an audit the Dutch tax office will not share this view, but will work with the solution.

Correction made in a previous year, needs to be made in the previous year. That is done by separate request.

The tax office has the opinion that if a company never makes a correction, the bookkeeping is probably not correct, as human beings are in charge of the bookkeeping.

Court case

A company had received an audit from the Dutch tax office. The conclusion was that a 50% penalty was issued for the year 2014 and for the year 2015. The amounts are EUR 7.200 and EUR 12.800 in penalties.

The company argued these penalties as they send a VAT correction by post to the Dutch tax office. Apparently that never arrived. The tax office argued that a deliberate mistake in the books were created, hence the fines.

The court ruled that a deliberate mistake is only one that can be proven. And as the company claims it has send the corrections, there is no proof of deliberate mistake. The penalties were erased, but the court did state the company should have followed up on their corrections themselves.

Tax is exciting

We think tax is exciting. Penalties are never exciting. We also use postal services for communications with the Dutch tax office. Our experience is that so often our mail ‘does not arrive’, so we now use registered mail for most postal messages. Either the postal service level has dropped this dramatically or the Covid work method with the Dutch tax office makes mail is ill received.

In this case I wonder if the audit was a true random audit or a result of very late received messages by mail. Sometimes we receive the quarterly bookkeeping send by mail a full quarter later. So we switched to full digital.

That the company did not chase their own VAT corrections we can also understand. If you learn you paid not enough VAT, you update the Dutch tax office and the Dutch tax office decides not to act on that. Why insist on that. The fact that your message never reached the Dutch tax office was not taken into account.

Entrepreneurs deduction (zelfstandigen aftrek)
Cooking the books, but not VAT!

VAT audit – how not to do that!

A company is a source of income

VAT audit, never a pleasant audit as the VAT department of the tax office is very rigid. What not to do during such an audit.

VAT Audit

VAT stands for Value Added Tax and that is charged on turnover. The amount of VAT received, as being paid by clients, is to be paid to the Dutch tax office. The VAT charged, as VAT on costs, can be reclaimed by the Dutch tax office. Mathematical this is a neutral system, psychological absolutely not a neutral system.

The VAT department of the Dutch tax office is rigid. With that I mean, really rigid. If VAT is not paid to the Dutch tax office that should have been paid, this is regarded money laundering. Money laundering is a criminal offence for which you can go to jail. Jail we think is rigid.

How not to do the VAT audit – not providing bookkeeping

Mind you, this case is about a tax advisor. The tax advisor should know better, then again, maybe this person was never fit to be a tax advisor in the first place. Hence I feel reluctant to refer to this person as collegeau, as I think he is not.

The Dutch tax office started an audit for the years 2014-2017. The tax advisor refused to provide the administration. The whole purpose of keeping an administration is to be able to have that audited!

The consequence of not providing the administration is that the tax office is going to impose what they think is the correct amount. The VAT reports show EUR 7.716 over a four year period. The tax office has the opinion that this amount should have been EUR 262.489 instead.

VAT penalties

In the Netherlands we have an UNA VIA rule. That implies, you cannot be charged for a crime twice. This implies that the Dutch tax office does not impose a fine for VAT issues, but has a criminal court case in which jail time is demanded. Fortunate for this tax advisor a penalty was put in place.

The penalty the tax office thought was good for this situation was a 100% penalty. 100% over the EUR 262.489. Amazing. The percentage is not 25 or 50, what is the more common penalty percentage. But 100 as this tax advisor has committed this crime before. The tax advisor has similar prior convictions with respect to VAT. That could be the reason this time the UNA VIA route of penalty instead of jail time was chose. Jail time had no influence apparently on the actions of this person.

VAT audit - court case
VAT audit – court case

VAT court case

In court the tax advisor claimed that the EUR 262.489 VAT on turnover was not correct as the majority of the clients was outside the Netherlands. However, if you do not provide the administration, the tax office cannot determine that. Upon this claim, the tax office asked proof of those 0% VAT invoices. In court the tax advisor provided the administration. The claim was reduced significantly.

The court reduced 100% penalty to 85% based on the period of time the court case took. Mind you, the audit probably started in 2018 and now, late 2021, the court came to a decision.

Tax is exciting

We think tax is exciting. An audit is exciting too, sometimes too exciting! If you start the audit already by not willing to provide relevant details, then you have issues. The civil servants of the tax office have plenty of time and means to play this game, as they are aware they will win the game. The win is basically in you getting bankrupt. The fees and penalties nobody can afford.

To keep tax exciting, we prefer to run a proper bookkeeping for you. To comply with demands of the tax office. Us, you and even civil servants with the tax office are human beings. We all can make mistakes, for that we have audits. For mistakes the tax office makes we have the court. Still, best to stay far away from that all.

ZZP and instantly you receive a EUR 5.000 penalty from the tax office

You registered yourself as ZZP freelance entrepreneur and instantly the tax office provides you with a EUR 5.000 penalty. What have you done wrong?

ZZP and EUR 5.000 penalty

The ZZP company is a transparent company which implies you as a person becomes an entrepreneur. The Chambers of Commerce will register you as such. The Dutch tax office will issue to you a Value Added Tax number.

The VAT number is the problem. With the number you receive the deadlines you need to meet. Sometimes you even receive a pinkish form for a shorter period than a quarter to complete.

If you fail to complete either the pinkish form and or the regular quarterly VAT return, you receive this EUR 5.000 penalty.

ZZP and isntantly you receive a EUR 5.000 penalty

Is the penalty a problem?

Yes and no. Yes, any penalty is a problem, especially if you are the person that needs to pay. No, probably this penalty can be solved.

Why is the penalty send to you?

The tax office has many years of experience of working with human beings, and they tend to respond better to a penalty, then to a reminder letter. From an efficiency point of view the tax office sends the reminder. However, the aim of the tax office is not for you to pay the penalty. The aim of the tax office is to solve the penalty by filing the Value Added Tax return.

The moment the VAT return is send for the concerning period, often the issue is solved. However, some people are slow to comply. Then only filing the VAT return is not sufficient, then also a complaint needs to be made against the penalty. The penalty for being late, EUR 65, we cannot solve, as you were too late. The penalty for paying late might be able to be solved, depending on the fact if you need to pay VAT.

Experience learns that the first VAT return often results in a refund or zero return. After filing the first VAT return the entrepreneur is aware of its obligations and the penalty will not come again.

What if you simply pay the penalty?

If you pay the penalty, but you still do not file the VAT return, the case is not solved. Yes, the penalty problem is no longer there, but you are still obliged to file a correct Value Added Tax return.

We have experienced a client simply paying the EUR 5.000 penalty. The next quarter it was EUR 7.500, then EUR 10.000 then EUR 11.500. All paid. A lady working with the tax office phoned us with the question why all penalties were being paid. We were not aware of the penalties, so we contacted the client. The client was aware of the penalties and every time the penalty was much lower than the actual VAT amount, hence he chose to pay the penalty instead.

Paying the penalty does not imply you have no more obligation to file a correct VAT return.

Tax is exciting.

We think tax is exciting. We are excited to assist you with your EUR 5.000 penalty. Not only we think we can make you happy with not paying this fine. Also we think we can contribute to you with processing the bookkeeping, answering questions and maybe solving more tax issued you might have.

Filing a VAT return for a refund can cause an audit

Filing a VAT return (Value Added Tax return) resulting in a refund, can cause an audit we noticed over the past couple of weeks. Is this a problem?

Filing a VAT return

A business doing well often has more turnover than costs, shown in the VAT return. The turnover is subject to VAT that needs to be paid to the tax office. The costs included VAT you paid to another entrepreneur, that you can claim back from the Dutch tax office. If the turnover is higher than the costs, you have to pay VAT to the Dutch tax office.

Example

You have a EUR 10.000 turnover plus 21% VAT is EUR 12.100 turnover. The 21% being EUR 2.100 you need to pay to the Dutch tax office. To create this turnover you made EUR 2.420 costs that included EUR 420 VAT. This amount is claimed back in the VAT return, hence you pay EUR 2.100 minus EUR 420 is EUR 1.680 to the Dutch tax office.

Startup company and VAT

A startup company often struggles to get enough turnover, but is making regular costs to be able to present itself. In such a situation the turnover could be EUR 2.420, the costs EUR 12.100 and then in the VAT return the tax office pays the company EUR 1.680 VAT.

Covid19, VAT and audit

Covid19 makes that business is not good for everybody. Somebody could think that a VAT refund from the tax office might help paying the costs better. Even when the company is not entitled to a refund or such a high refund. We think, but we have not evidence, that such fabricated VAT returns have triggered the Dutch tax office.

We have been contacted by the Dutch tax office frequently recently where we were informed that the system pulled out a refund VAT return for audit. New policy.

Filing a VAT return for a refund can cause an audit
Filing a VAT return for a refund can cause an audit

VAT refund reason for an audit?

We disagree that a VAT refund should trigger the tax office to audit the company. At the same time we understand their position.

Why do we disagree? Well, we have a substantial number of clients that simply do not do business in the EU. If business is done outside the EU, like now with the United Kingdom, then the VAT on the invoice is out of scope. Out of scope VAT is not part of the VAT return, but the rent costs with VAT and other costs with VAT are part of the VAT return. That results in a refund, and now results in an audit.

Why do we understand the audits? The Dutch tax office needs to protect the largest source of tax income from erosion by non-complying tax payers. That is part of the game.

Is an tax audit a problem?

We think an audit by the Dutch tax office is not something you should volunteer for. But if you are up to be audited, we have good faith it will work out. In the past audits have also contributed to a learning curve. With every audit we hope that such learning curves were indeed in the past.

Tax is exciting

We think tax is exciting. We are not so excited about audits by the Dutch tax office. Maybe you should see such an audit as a school exam. Then it is learned if you paid attention when the teacher/bookkeeper was instruction you.

New VAT rules as per July 1, 2021 in the EU

Entrepreneur leaving the Netherlands

Tax is a super exciting subject and the Governments around the world keep excitement up by constantly changing the rules. They have done it again, now inside the EU.

What are the new VAT rules as per July 1 about?

The new VAT rules are about you selling goods to private individuals outside the Netherlands, inside the EU. If this does not apply to you, this article is not for you. If you provide services to private individuals, nothing will change for you.

Situation till July 1, 2021

Right now there is a per country method. This implies you have to exceed a certain amount of sales before you are obliged to charge the VAT rate of this particular country. The limit amount varies per European country.

The moment you exceed the threshold or limit you are obliged to register your company for Value Added Tax purposes in that country. Then you need to comply with the local VAT requirements to fulfill your obligation. Feels very old, it is old.

Sales exceeding EUR 10.000

From July 1, 2021 the system will change. If you sell in the entire European Union outside the Netherlands for more than EUR 10.000 in turnover, you need to charge the local EU country Value Added Tax rate.

On top of that you need to assure yourself you charge the correct VAT rate. Some countries have three rates. You need to apply the correct invoice requirements as you are now obliged to issue the private individual with an invoice. We do have EU set invoice requirements, but some EU country still have specific alterations.

How to file your VAT return in the EU?

The main rule is that you need to register your company in every EU country where you are charging the applicable VAT rate. The VAT you charge you need to pay to that specific EU country.

Governments understand that in this time and age this is not a very progressive situation. Hence in the EU it has been decided to introduce the One Stop Shop or OSS. The OSS is a system where you announce yourself to the tax office in the EU country where your company is registered, with the desire to file pan EU VAT return. This EU country will then distribute your one payment among the other EU countries.

The Dutch tax office has opposed this system as the Dutch tax system is not ready for the OSS. The tax office have stated that they can currently handle max 30.000 companies. It is key to get your OSS activated quickly to be part of the first group of 30.000 companies.

How to create one stop VAT facility for EU sales to private individuals under new VAT rules?

If you have a one man company and your digital ID, log on with your digital ID. If you have a so called E3 certificate to communicate with the Government, log on with your E3 details. Then you go to the Dutch tax office and the ‘EU-btw-eenloketsystem’ and there you can register your company.

One of the conditions of the one stop shop VAT filing is that you have terminated your VAT registrations in the EU countries as per July 1 next.

Tax is exciting

We think tax is exciting. The EU Governments are excited about collecting the VAT they should have received already much earlier for sales to private individuals in their country. We understand this need and we are glad to learn made use of the EU collective to create the OSS. If you needs assistance with our EU sales or with your Dutch domestic VAT obligations, feel free to contact us.

Too late received tax assessment for appeal

Difference employment versus self-employed: disability insurance

Too late received tax assessment for appeal implies the assessment was received by the tax payer on a date when the time line for appeal has already passed. What to do?

Too late received tax assessment for appeal

Receiving a tax assessment very late or not at all is common practice the last few years. The reason can be many. Regardless, the tax office denies your complaint as you are too late. If you counter that decision, the reply is that the tax office used Postnl, hence the assessment was send correctly.

Mail not received

Not receiving mail is common practice, we suggest to use registered mail for important messages. A big envelop often takes at least a week longer to arrive in our office, then a small envelop. We even receive mail three months later. The claim that Postnl is good enough for the Dutch tax office, is not good enough for us.

There are more aspects that can cause mail not to arrive at your address.  Recently we had the case of a liquidated BV company. A liquidated company implies the BV company no longer exists. That is registered with the Chamber of Commerce. The office address of the BV company is no longer used, no longer accessible. Still the tax office kept on sending assessments and reminders to that address.

You emigrated from the Netherlands. Before you emigrated you deregistered at city hall with your new forwarding address details. Still the tax office keeps on sending letters to your old address in the Netherlands, or if you kept owning the property in the Netherlands, to that rented property.

Too late received tax assessment for appeal

Too late received tax assessment for appeal – court case

A Dutch tax payer was confronted on February 21, 2019 with a message from the collector of the tax office. The message stated that the tax refund was to be compensated with an outstanding 2013 (!) tax assessment. He was told that this assessment had a date of December 20, 2018.

An assessment can be appealed within 6 weeks from the moment the assessment has become known to you. That is not the same as 6 weeks from the date of the assessment.

On May 31, 2019 this Dutch tax payer was still unknown about the assessment, as it never arrived. That day he filed a complaint against the assessment.

The Dutch tax office was keen enough to immediately disregard the  complaint, as it was not filed within 6 weeks from December 20, 2018. The first court denied an appeal to the denied  complaint for the same reason.

Only the higher court agreed with the Dutch tax payer. This implies the assessment will be made known to this tax payer and then he still had 6 weeks time to make a complaint.

Tax-is-exciting

We think tax-is-exciting, fighting windmills is not. And this Don Quixote feeling is also known to us. We have had a similar case with a 2013 huge assessment popping up in 2019 and you need to move heaven and earth to get it solved.

Or a penalty  issued for an ICP obligation that was apparently introduced. That announcement of obligation to file a monthly ICP return was never received. Neither was there any reason a monthly ICP return should be file. A reason is a EUR 50.000 quarterly EU goods turnover in the previous 4 quarters, but the turnover was nil in that period. Fighting this type of non received assessments is what we do. It comes with Don Quixote at your side, could be us.

Brexit and VAT

Entrepreneurs deduction (zelfstandigen aftrek)

Brexit and VAT needs to have your attention if you provide services to the United Kingdom.

Brexit and VAT

The United Kingdom has left the European Union January 31st 2020. From a practical point of view the tax consequences of this Brexit were postponed to December 31st 2020.

We are past the December 31st 2020 date when you read this, what does the Brexit imply for the VAT on your services to UK companies?

VAT on services to the United Kingdom

In the situation you are a service provider to a company in the United Kingdom that has a valid VAT number, you issued an invoice at 0% VAT. Now the UK has left the EU, the UK is a country outside the EU. When a country is outside the EU, the country is also outside the EU VAT system.

No VAT is charged on an invoice issued to a company or private person outside the EU.

Brexit van VAT

What is the difference between 0% VAT and no VAT?

The difference  between 0% VAT in the EU and no VAT outside the EU is a formality difference. Although a formality, you need to comply, otherwise the formality becomes expensive.

In the EU you can charge 0% VAT to the other entrepreneur. Important to check if the other company is indeed a VAT entrepreneur. In the UK it is possible to run a company and not be a VAT entrepreneur. Hence we always suggest to check at VIES if the EU entrepreneur is a VAT entrepreneur.

Under invoice requirement conditions 0% VAT can be charged. However, if the EU entrepreneur is not a VAT entrepreneur the 0% rate cannot be applied. The 21% rate is then applicable. Often the client will not appreciate that a lot. Suddenly the correct EU VAT number is provided to you.

What does no VAT imply?

No VAT implies you provide a service to a company or private individual outside the EU. For companies that is often easy to determine. That said, make sure you use the correct company details. If you invoice to a US Inc and you send the invoice to a Dutch address they also use, 21% VAT should have been charged.

The same applies to the private individual, how to determine the individual lives outside the EU. Please do some checking to the best of your ability, to avoid the Dutch tax office charges you with 21% VAT. VAT you often cannot claim with the private individual, as the price set was supposed to have been including VAT.

Tax-is-exciting

We think tax-is-exciting, formalities are often not. Then again, complying with formalities makes your life easier, than fighting them.  Follow the requirements, update you invoice content to your UK clients and be in line with new applicable VAT rules to the United Kingdom.

False invoices and VAT

income tax

False invoices and VAT is a problem. A problem you may not have intended to cause, but can be easily caused. What is this about?

False invoices and VAT

VAT stands for Value Added Tax and this department of the Dutch tax office we always refer to as the department with humorless civil servants. The reason for this remark is their strictness and their connections with the justice department. A fraudulent case is send to jail, where normally a financial penalty is issued.

VAT department too strict?

I think not and I think this needs some explanation. The women that opened my eyes (tax wise) is Ms Van Vilsteren. She once said during a VAT course if I would accept a EUR 50 bank note she freshly copied in the hall, for one of my EUR 50 in my wallet. Ofcourse not. But she argued it was a colored copy! Still not. And that is how you need to see an invoice, she said. Like a EUR 50 banknote.

A banknote has a number of criteria that makes it true or false. And if false you cannot use it and if you do use it, you go to jail. Article 35a of the VAT act states clearly what criteria an invoice needs to contain in order to be a true invoice and not a false invoice. No rocket science, simply putting the administrative details on the invoice.

How can this go wrong?

If you are the entrepreneur issuing incorrect invoices, you have a problem. That is easy to understand. What if you are doing it by the book, but your clients are not. If your clients send you an invoice and one of the aspects of the invoice is incorrect, you cannot claim back the paid VAT.

You might think that one invoice is not too bad, maybe not. But what if we inform you that the Dutch tax office labels this as money laundering? Are you then as relaxed as you were initially. Indeed, the VAT department of the Dutch tax office labels a VAT return in which more VAT is claimed back then possible as money laundering. They use their entrance of justice department to prosecute you, that is how jail time come into the picture.

False invoices and VAT

What aspect on the invoice is often misunderstood?

Obvious obligations on the invoice such as name, address, date, chamber of commerce number and specification of the service or goods is obviously done correct we assume. The issue often in international relations. When an invoice at 0% is send to another EU country, the other EU country VAT number needs to be mentioned on the invoice. Plus some formal statement about reverse charged turnover.  If not done, you cannot charge 0%, hence a false invoice lacking 21% VAT.

Or in the situation that you export goods to another EU country, hence you claim the 0% on the invoice plus all the requirement. Then you decide to bring the goods yourself. If you bring the goods yourself, it cannot be a 0% transaction and is regarded a local delivery in that other EU country. The other EU country VAT rate applies.

You send an invoice to a private individual in another EU country like Denmark, Sweden, Hungary, Poland, Czech Republic, Bulgaria, Romania or Croatia and you use the local currency, also in the VAT amount mentioned on the invoice. That is fraudulent as well. The VAT amount need to be stated on the invoice in euro currency. For private individual there is no invoice obligation, but if you do send an invoice, it needs to be correct.

A mistake on the invoice, you levied too much VAT due to calculation error, in the VAT return you pay the correct amount to the Dutch tax office. That is false as well, as the VAT act states that if you levy an amount , you need to pay that amount to the tax office, regardless.

We can continue with more aspects. The VAT legislation is truly an act on its own.

Tax-is-exciting

We think tax-is-exciting, you think VAT is simple charge and claming back 21% VAT. But it is not. There is more to the Value Added Tax rules and regulations you would imagine. We can understand that, hence you need a professional at your side to assist you. We think we are that professional.

Check your tax messages

income tax

We know we think tax is exciting and you might find it a bit boring, but regardless. Check your tax messages. What is this about?

Check your tax messages

A tax message is a blue envelop you receive by regular mail. The tax office never sends you a WhatsApp. You are never send an SMS by the tax office. The tax office never sends you an email. The tax office is also never sending you a link via what you can easily pay an amount. An amount introduced to you for the first time in such a message. The tax office is an old fashioned dinosaur. It uses mail and expects you to make the bank transaction.

Check your tax messages – this is a fraudulent message – not a genuine tax message

Soon we expect home owners to receive from the Dutch tax office the 2021 mortgage refund assessment. You see the word refund and you think, approved. We see the word refund and we wonder if that is the correct amount.

When you own a home with a mortgage, you pay off the mortgage monthly. Hence every month you pay less interest, so less the deduct. At the same time the WOZ value is a kind of threshold on this deduction. As you know, the WOZ value is like a rocket, keeps on climbing. Which implies your deduction keeps on being less and less.

The question is, is that refund not too high. You might wonder how can anything you get from the tax office be too high. Well, when you file your 2021 income tax return in 2022 and it turns out you have received too much that you need to pay back. Paying back is never nice.

Check your tax messgages – Filing obligations

Maybe you have not received a refund assessment, but another letter. Dutch letter of course. You are unsure what it is about. Expecting this to be solved by putting it away is a misjudgment.

Believe it or not, but the tax office can also make you aware of tax refund that is waiting for you. You only need to file the income tax return. We will be glad to assist you.

Child care benefit

You might have learned about the drama taking place with Dutch parents that were denied the child care benefit tax credit. If you have a child that you bring to daycare and you are both working, you are entitled to such a credit. If you do not have such a credit, request for one.

That said, if you have such a credit, check if the income details you used for the initial application are still correct. If not, please update your income details for this tax credit.

Tax-is-exciting

We think tax-is-exciting and we understand you might have a different opinion. Never the less, you need to check your tax messages. Could be important.

Sorry for the dashes in the middle of the word tax-is-exciting. Apparently Google has a dirty mind and sees only a three letter word that we refer to when we practice to reproduce ourselves. Anything related to that word is spam, hence this devout solution.

Introduction: our Exact online & VAT specialist: Max

I would like to use the opportunity to introduce our Exact online & VAT specialist Max. Max is a young professional who gets excited about having your balance actually in balance.

Exact online & VAT

Last year we updated the way we processed the books. It was done till then in a rather old fashioned bookkeeping program with a type of dinosaur name. Which of course fits the bill as bookkeeping has not changed since before ice age started. A balance needs to be in balance, and the profit and loss needs to connect to the change in the balance.

However, institutes and people have changed. The institute named the Tax Office is about to change, but naturally Covid19 has slowed down the pace.

Exact online & VAT: changes of the tax office

The tax office uses a portal where you as entrepreneur can log on with a username and a password, which is not your digital ID, to file your VAT return. Then if you log on you see the form that basically is a digital version of the paper form we have had for decades.

If you pay attention, you see the tax office referring to this manner of filing your VAT details as the old fashioned manner. “naar het oude portaal” (to the old portal). When something is old, there must be something new.

The new method will be abandoning the old portal and either you file via a E3 certificate to communicate with the Government, or you file via your bookkeeping software. This is not a simple change in way of filing, no, the tax office wants you to provide your full bookkeeping for that period of time. That is much different than simply filing a form, where it is possible you are tempted to complete it more in line with your cash base. That is ofcourse illegal, but it does happen.

Why would the tax office like you to file your full bookkeeping? Simple answer, they want to check if what you provide as VAT details is indeed correct. Moreover, they want to see what will be your forecast profit wise. Based on that forecast the tax office will already impose a preliminary tax assessment. This already happens, but again up to the desire of the entrepreneur how to complete this forecast. This will change to the tax office making the calculations themselves.

This is not only a hunger for money, but also a protection of you the entrepreneur to be able to pay the tax before it might have been spend already.

Exact online & VAT. Max is ready to assist you

Exact online & VAT: changes of the entrepreneurs

Not only the tax office is changing its manner of operating, also the people change their manner of living. Printing a bank statement and putting it in a folder feels like the 80’s of the last century. Who does that? Well I do J , as I am at an age that I still expect the server to crash. I am then still able to provide the books upon request of the tax office.

Most entrepreneurs like the bank statements to be uploaded in the accounting system automatically and to have the invoices be processed likewise. Exact online offers exact-ly this option of you taking a picture of the invoice and this invoice then arrives in the system where Max can process that.

Still the entrepreneur needs to keep the invoice 7 years on file. Some think that uploading is enough, hence no longer necessary to keep the original invoice. That is not correct. The invoices are uploaded in PDF format. PDF is open to changes. Changes in date, name of the invoice etc are possible. That the tax office finds undesirable, hence the original could be asked for.

Exact online & VAT: Max

Max is young, Max loves to work with exact online and Max is very much excited about our clients either using the Exact online software or to teach them how to optimize the use of Exact online software.

For instance, you have an actual shop with a cash registrar. Before you purchase a cash registrar or when you think it is time to replace one, contact Max to see which one is able to connect with Exact online. That makes the life of the entrepreneur much more relaxed, as at the end of the day no more extracts from the cash registrar needs to be kept on file.

Or you work online and use portals such as Mollie who collect in your name the payments. Exact online can make a connection to this Mollie system and book the turnover automatically.

If you have a question about optimizing your books in Exact online, contact Max. Max@orangetax.nl

Tax-is-exciting

We think tax-is-exciting. Sometimes before a proper tax return can be filed, books need to be processed. This is often done in the VAT quarter months of January, April, July and October. In the old fashioned ice age way that meant a lot of work to be done in these months. The new exact online Max way implies the books can be done every week. In the VAT filing month it is simple checking and filing the VAT return. That can even make our clients become excited.

Sorry for the dashes in the middle of the word tax-is-exciting. Apparently Google has a dirty mind and sees only a three letter word that we refer to when we practice to reproduce ourselves. Anything related to that word is spam, hence this devout solution.