Decree on the levy of turnover tax on permanent establishments updated
A permanent establishment constitutes a place for levying VAT. It is therefore important to determine whether there is a permanent establishment in the Netherlands or abroad. The decree of the State Secretary of Finance on December 17, 2020 (Government Gazette 2020, 62975) provides an explanation of the aspects that are relevant when (determining) whether there is a permanent establishment.
Changes to the determination of a permanent establishment
The main changes relate to:
- The impact of the Skandia judgment by the EU court of Justice on the levying of VAT on mutual supplies between a main house and a permanent establishment (sections 3.2.1 and 3.2.2);
- The impact of the Morgan Stanley judgment on the deduction of input tax on expenses arising at a permanent establishment in the Netherlands (section 4);
- The reverse charge of VAT for B2B services (Art. 6 paragraph 1 Sales Tax Act 1968) purchased by a purchasing fixed establishment for itself and on site (part 5);
- Explanation cases in which the reverse charge of VAT to the customer in the Netherlands is not possible, because the permanent establishment in the Netherlands of the foreign entrepreneur is involved in the supply made by the foreign entrepreneur in the Netherlands (part 6);
- Explanation of how a service provider can determine whether the principal house or the permanent establishment is receiving a service (section 7).
More information or advice
Do you have any questions about the sales tax decree for permanent establishments? Please contact Anne Kin, VAT advisor, at telephone number +31135915125 or send Anne an e-mail.