Input VAT vs. Output VAT (Voorbelasting vs. Verschuldigde BTW)

Key Takeaways

Output VAT (verschuldigde BTW) is the VAT you charge to your customers on your sales.
Input VAT (voorbelasting) is the VAT you pay on your business purchases.
Every quarter, you calculate: output VAT − input VAT = net VAT. If positive, you pay. If negative, you get a refund.
You can only deduct input VAT on purchases that are used for your taxable business activities.
Mixed-use purchases (business + private) require a proportional deduction — you can only deduct the business portion.

Output VAT: What You Charge

output VAT

Every time you make a taxable sale, you add VAT:

Your Service/Product	Price Excl. VAT	VAT Rate	VAT Amount	Price Incl. VAT
Web design project	€3,000	21%	€630	€3,630
Consulting (10 hours × €120)	€1,200	21%	€252	€1,452
E-book sale	€25	9%	€2.25	€27.25
Export to US client	€5,000	0%	€0	€5,000

The output VAT you collect is not your money. It belongs to the Belastingdienst. You are holding it temporarily until you file your VAT return.

When Output VAT Is Due

Output VAT becomes due at the earliest of:

The date you issue the invoice
The date you receive payment
The date the goods are delivered or the service is completed

In practice, most businesses report output VAT in the quarter the invoice was issued.

Input VAT: What You Pay

input VAT

Every business purchase that includes VAT potentially gives you a deduction:

Business Purchase	Price Excl. VAT	VAT Paid	Deductible?
New laptop for work	€1,200	€252	Yes — fully business use
Office supplies	€80	€16.80	Yes
Business dinner with client	€120	€25.20	Partially — 80% deductible for income tax, but 100% VAT deduction
Mobile phone (50% private use)	€800	€168	50% — only business portion
Groceries for personal use	€150	€13.50	No — not a business expense

Requirements for Deducting Input VAT

To deduct input VAT, you must have:

A valid invoice that meets all Dutch invoicing requirements (supplier name, VAT number, description, amount, VAT rate and amount)
Business use — the purchase must be for your taxable business activities
Timely reporting — deduct input VAT in the period the invoice was received (or the next return if you missed it)

Warning

A receipt or bank statement is not enough to claim input VAT. You need a proper invoice with all required elements, including the supplier's BTW-id and a breakdown of the VAT amount. If the invoice is incomplete, ask the supplier for a corrected version.

The Calculation: Net VAT

Every quarter (or month), you calculate:

Output VAT (what you charged customers)
− Input VAT (what you paid on purchases)
= Net VAT

Scenario 1: You Owe Money (Most Common)

	Q1 Amount
Total output VAT charged	€4,200
Total input VAT paid	€1,800
Net VAT to pay	€2,400

You transfer €2,400 to the Belastingdienst by the filing deadline.

Scenario 2: You Get a Refund

	Q1 Amount
Total output VAT charged	€800
Total input VAT paid	€3,500
Net VAT refund	−€2,700

The Belastingdienst refunds €2,700 to your bank account, typically within 6–8 weeks.

This happens when:

You made a large investment (bought equipment, vehicle, etc.)
Most of your sales are zero-rated (exports, intra-community supplies)
Your business is in a startup phase with more costs than revenue

Mixed Use: The Pro-Rata Rule

When purchases are used for both business and private purposes, you can only deduct the business portion of the input VAT.

How to Calculate the Business Portion

The most common methods:

Method	How It Works	Example
Actual use	Track real business vs. private usage	Phone: 70% business calls → deduct 70% of VAT
Floor space	For home office costs, use the ratio of office space to total space	Home office is 15% of total floor area → deduct 15% of VAT on energy, internet
Revenue-based	Ratio of taxable to total revenue	80% of revenue is taxable → deduct 80% of general overhead VAT

Tip

The Belastingdienst accepts reasonable estimates, but you must be consistent and able to justify your method if audited. Keep a brief note explaining your allocation method in your records.

Special Case: Mixed Taxable and Exempt Activities

If your business provides both taxable services (on which you charge VAT) and exempt services (on which you do not), you can only deduct input VAT that relates to the taxable activities.

For costs that serve both (general overhead), you use the pro-rata method:

Deductible input VAT = Total input VAT × (Taxable revenue / Total revenue)

Example: You are a physiotherapist (exempt) who also gives fitness workshops (taxable at 21%). Your revenue is 80% exempt and 20% taxable.

Total input VAT on overhead: €2,000
Deductible: 20% × €2,000 = €400
Non-deductible: 80% × €2,000 = €1,600 (this becomes a cost for your business)

The Private Use Correction (Privégebruik)

If you initially deducted 100% of input VAT on a purchase that is partly used privately, you must correct this through a private use addition (correctie privégebruik) in your last VAT return of the year (Q4 or December).

This is common for:

Company car — if you use it privately, you correct a portion of the deducted VAT
Business phone or laptop — if also used for personal purposes
Home office costs — if you deducted VAT on home costs

Company Car Private Use Correction

If the BV provides you with a car and no mileage log is kept (or private use exceeds 500 km/year), the private use VAT correction is:

2.7% of the car's catalogue value (including VAT and BPM) per year

This is reported as output VAT in the final return of the year.

Capital Goods Revision (Herzieningsregeling)

For significant business assets (capital goods), the VAT deduction may be revised over a period of years if the business use changes:

Capital Good	Revision Period
Movable goods (equipment, vehicles) ≥ €450	5 years
Immovable goods (buildings, land)	10 years

Example: You buy a machine for €50,000 + €10,500 VAT, initially 100% business use. In year 3, business use drops to 60%. You must repay part of the previously deducted VAT for years 3–5.

This rule prevents businesses from claiming full input VAT on a large purchase and then switching to private or exempt use.

Practical Tips

Keep all invoices — Physical or digital, stored for 7 years. No invoice = no deduction.
Check every incoming invoice — Ensure the supplier's BTW-id and VAT breakdown are present. Request corrections before paying.
Separate business and personal purchases — Use a dedicated business bank account and credit card to simplify VAT administration.
Use bookkeeping software — Tools like Moneybird or Exact Online automatically categorize input/output VAT and generate your VAT return.
Claim everything you are entitled to — Many entrepreneurs miss deductions on travel expenses, professional subscriptions, software, and home office costs.

Common Mistakes

Deducting VAT on exempt purchases — Not all invoices include VAT. Financial services, insurance, and certain other services are exempt. No VAT charged = no VAT to deduct.
Deducting VAT on private expenses — Only business purchases qualify. That family dinner is not deductible, even if you discussed work.
Missing the deadline — If you do not report input VAT in the correct period and do not catch it within the statute of limitations, you lose the deduction.
No valid invoice — A bank statement or receipt without a full invoice is not sufficient for input VAT deduction.