VATupdate Newsletter Week 5 2022

The Dutch tax authorities have IT problems. For many of us, this is not a surprise. In fact, they were one of the countries who asked the EU Commission to postpone the implementation of the new VAT e-commerce rule, because they didn’t expect to be ready with the IT set-up for this on time. When the EU Commission made it clear that there would be no (further) postponement, the Dutch tax authorities announced that they would implement an ‘emergency road map’, which would include lots of (manual) workarounds.

To be fair: they were able to implement something on time. And compared to some other Member States, they didn’t even do so badly.

But recently, the Dutch tax authorities had another similar message, which caused some stirs amongst a broader public: they are not able to implement a new VAT rate for healthy food.

The Netherlands has a standard VAT rate of 21%, that applies to most products and services. They also have a reduced rate of 9%, which applies to specific types of goods and services, including foodstuffs. Politicians have proposed to levy a zero-rate on specific foodstuffs, i.e., ‘healthy food’, such as vegetables and fruit. Sounds sympathetic, but for the tax authorities, an additional reduced rate is impossible to set-up in their IT system.

In a way, we cannot blame them. Businesses that are confronted with rate changes know what it’s like to implement these changes in the ERP, invoicing, and cash-register systems. Adding or changing tax codes, invoice lay-outs and reports is a nightmare, and you need sufficient time to develop, implement and test the changes.

In fact, it is expected from businesses that they can do this, sometimes even in very short times, or even retroactively. We still remember the situation when Italy changed its VAT rate almost overnight, causing companies to close their store early on Saturday, work day-and-night, so that they could open their shops again on Monday, applying the new rate. In some cases, just by pasting removable stickers on the counters, and asking employees to recalculate prices at check-out with a calculator.

Do we pity the tax authorities? No, of course not. Perhaps it’s even good that they experience the same thing as all these companies that must adjust to the government’s whims, immediately, and without mistakes. On the other hand, we all know that the tax authorities will just shift the burden to companies again…

Looking at the bright side: here’s your weekly VATupdate newsletter again! Have fun and have a great week!

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