Changes to Dutch VAT Groups: Exclusion of Foreign Establishments and Implications for Cross-Border Supplies

• Foreign establishments in the EU can no longer be included in a Dutch VAT group as of January 1, 2024
• This change has significant consequences for the VAT treatment of supplies between entities in a Dutch group and foreign establishments
• Previously, foreign head offices were automatically included in the group, resulting in cross-border supplies being outside the scope of VAT in the Netherlands
• Now, a Dutch group and a foreign establishment are separate taxable persons for VAT purposes
• Supplies between the group and the foreign establishment are subject to VAT, unless an exemption applies or the place of supply is outside the EU
• Taxpayers should assess how services are purchased and charged within their company and consider the VAT consequences
• The policy shift may have negative impacts on businesses that cannot fully deduct VAT and may require changes to administration and ERP systems
• It may be possible to modify the group structure to achieve more beneficial VAT treatment.

Source: bdo.global

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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