Netherlands Tax News

Dutch increase reduced VAT rate

Recently the Dutch coalition published their agreement, which has set out that there will be an increase to the reduced VAT rate from 6% to 9%.

This reduced VAT rate applies to, amongst others, products and services, food and non-alcoholic drinks, medicines, books, newspapers and magazines, agricultural and horticultural seeds.

This should come into effect from January 2019.

Netherlands narrows the scope of 6% VAT rate on medicine

Dutch tax authorities are looking to narrow the scope of medicines which are subject to the 6% reduced VAT rate.

The qualification as ‘medicine’ in respect of the VAT treatment to apply rests on on whether a product is presented to consumers as ‘medicine’.

In this context, products like toothpastes that contain sodium fluoride, as well as sunscreens with UVA and UVB filters have previously been ruled by the Dutch Supreme Court to be ‘medicine’ for the purpose of the 6% reduced VAT rate. As a result, it is likely the Dutch VAT rules will be redrawn to limit the scope of products which can apply the reduced rate of VAT.

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