VAT on the invoice? Then the VAT must be paid!

An entrepreneur operating as a sole proprietor works on international projects, specializing in industrial cooling systems. His activities are carried out worldwide, and in 2017 and 2018, while performing work for a Dutch client, he mistakenly—but incorrectly—charged Dutch VAT on his invoices. He did not report all the invoiced amounts in his VAT returns. As a result, the tax inspector issued an additional VAT assessment.

The entrepreneur disagreed with this. He argued that he provided his services from Spain, that the Dutch VAT was a mistake, and that he had neither a residence nor a business in the Netherlands. He took the matter to court to contest the assessment.

However, the ruling by the Zeeland-West-Brabant District Court was crystal clear: anyone who includes VAT on an invoice is liable to pay that VAT. It does not matter where the services were actually performed or whether the transaction was even taxable in that country. VAT is due in the Member State stated on the invoice. It's important to understand that the recipient of the invoice will generally deduct the VAT and has the right to assume that the VAT has been properly paid by the issuer.

This is an important lesson that shows just how crucial it is to understand VAT regulations—especially when engaging in international business. That’s exactly the kind of smart solution we’re here to help you with, so you can focus on the work you enjoy. Reach out to your account manager if you’re doing business internationally.