VAT News

Netherlands bad debt relief proposals

Where a taxable person makes a taxable supply of goods or services, they are required to remit the output tax to the appropriate tax authority, with reference to the tax point of the supply (unless they are part of a cash accounting scheme). Such remittance will often be made prior to receiving payment from their customer. If they then never receive payment, this is a bad debt and represents a VAT loss.

Where this happens to a taxable person registered for Dutch VAT, a separate request must be made to the tax authorities in order to recover the output tax previously remitted.

However, under new proposals, the taxable person will automatically be entitled to bad debt relief 1 year after the tax point of the supply, if no payment is received. Additionally, recovery will be effected through the periodic VAT return, rather than having to make a separate application to the Dutch tax authorities.

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