Application of 0% VAT to export of goods

The State Secretary of Finance has published an updated decree on the application of zero VAT rate in the Netherlands. Among other things, the updated decree provides legal guidance and sets limits on the application of the zero VAT rate to international trade of goods and services. Section A.2. deals with the application of the zero VAT rate to export of goods.

Export of goods

The zero VAT rate is applicable to the goods supplied by an entrepreneur which are:

1. Exported from the EU, with the exception of goods intended for supplying means of transport in the Netherlands;
2. Placed under the customs warehousing procedure based on Article 237(2) of the Union Customs Code.

An export of entrepreneur’s own goods to a third country does not constitute a supply for VAT purposes and therefore falls outside of scope of VAT. It is, however, an export for customs purposes. An entrepreneur who is a taxable person for VAT also has the right to deduct for goods that he himself has exported.

Proof of export through books and records

In order to apply the zero VAT rate to the export of goods, the trader should be able to prove that the goods have left the European Union by means of books and records. Section A.2. of the decree contains a non-exhaustive list of documents that may be used as a proof of export by the entrepreneur itself or by a freight forwarder or carrier. If the goods are exported by a customer who collects the goods from the warehouse or other point of sale, the supplier may also apply the zero VAT rate provided that he collects the necessary documentation to prove that the goods have left the European Union. A copy invoice to a foreign customer and a payment by that customer as such do not suffice. 

Application of the zero VAT rate on export of goods in case of chain transactions

A chain transaction with export occurs when the same goods are successively sold by several traders and then delivered by the first trader directly to the destination of the last customer outside the European Union or when the goods are stored in a customs warehouse. In such a scenario, the zero rate applies to all supplies within the supply chain, but it is necessary that each trader, except the last buyer outside the European Union, gives his supplier a written order of export from the Union or a written order of placing in a customs warehouse.

Application of zero VAT rate on export of pleasure boats

The supply of a pleasure boat to a destination outside the Union is, in principle, subject to the general rules for the application of the zero VAT rate including the rules for proof of the application of the zero rate. However, when the buyer takes the vessel to a destination outside the European Union on its own keel, it is difficult for the supplier to prove the application of the zero VAT rate on the basis of books and records, since in practice he often only possesses the export declaration. The updated decree under point 9.2. lays down the conditions to be met in order to apply the zero rate in such scenarios. Among other requirements, the supplier must keep in its records a declaration of the buyer's intention to export the pleasure boat and a confirmation of exit issued by the customs authorities. The model declaration is included as Appendix 1 or 2 to the updated decree.

If the pleasure boat temporarily returns to the Netherlands to carry out warranty work and then returns to a location outside the European Union, this does not affect the application of the zero VAT rate, as long as the boat is not used within the European Union other than to carry out warranty work.

More information?

Of course we are happy to help you if you have any questions about the changes in the decree or application of 0% VAT rate. Please contact one of our advisors for more information.