VAT rate on breeding services reduced to 9 percent
Clarity has finally been provided about the VAT rate used for supplying semen and embryos. All such services will be subject to the reduced VAT rate of 9 percent. This has been decided by the Tax Authorities after consultation with ABAB Accountants and Advisors, the Sector council Horses and the Ministry of Finance.
Ever since 2018, there has been uncertainty about the used VAT rate and entrepreneurs have been frantically e-mailing each other about vague approvals by certain inspectors from the Tax Authorities. However, these views were not shared by other inspectors and they were quick to make corrections. This ambiguity also resulted in discussions between entrepreneurs and their advisors. What was supposedly correct, and what should or should not have been done? ABAB believed that the reduced rate of VAT should apply and requested the Tax Authorities to provide clarification. This has now finally happened.
Scheme till 2018
Until 2017, the reduced VAT rate applied to the services provided by breeding, examination and artificial insemination companies, which included embryo transplantation. Under this arrangement, the supply of semen and embryos could be regarded as part of the insemination service or transplantation service. Therefore, the total fee was subject to the reduced VAT rate.
Legislative amendment 2018
The law then changed in January 2018 and both insemination- and transplantation services became subject to the general VAT rate. However, the reduced VAT rate continued to apply to the supply of sperm and embryos. Considering the essential nature of these services (insemination and transplantation), we took the view that these services fall under the supply of sperm or embryos, whereby the overall service would be subject to the reduced VAT rate.
Approval empty gesture
At the time, the Tax Authorities believed that the reduced VAT rate for supplying semen or embryos only applied if (future) foals were going to be used in breeding or agricultural activities or were intended for slaughter. With this in mind, the approval appears to be an empty gesture.
Would you like to receive more information about the VAT rate used for supplying semen and embryos? Please keep an eye on our website or feel free to contact our tax advisor Ad de Bruyn, on +31 (0)13-4647281 or send Ad an email.