VAT on Digital Services in the Netherlands

Key Takeaways

• Digital services sold to EU consumers are taxed in the customer's country — not in the Netherlands.
• Digital services sold to EU businesses follow the standard reverse-charge rule — you invoice without VAT.
• If your B2C digital sales to other EU countries are below €10,000/year, you can charge Dutch VAT instead.
• The OSS (One-Stop Shop) scheme lets you report and pay VAT for all EU countries through a single Dutch registration.
• "Digital services" has a specific legal definition — not everything online qualifies.

What Counts as a Digital Service?

The EU defines electronically supplied services (elektronische diensten) as services that are:

1. Delivered over the internet or an electronic network
2. Essentially automated — minimal human involvement
3. Impossible to provide without technology

Examples of Digital Services

What Is NOT a Digital Service

B2B: Selling to Businesses

When you sell digital services to a business in another country (EU or non-EU), the rules are straightforward:

EU Businesses

• Place of supply: Customer's country
• Your action: Invoice without Dutch VAT, apply reverse-charge
• Your VAT return: Report in box 3a (services to EU countries)
• ICP declaration: File listing the customer's VAT number and value

This is identical to the reverse-charge mechanism for any other B2B service.

Non-EU Businesses

• Place of supply: Customer's country (outside EU — outside the scope of EU VAT)
• Your action: Invoice without VAT
• Your VAT return: Report in box 1e (exempt/out-of-scope)
• You can still deduct all input VAT related to these services

B2C: Selling to Consumers

This is where digital services get special treatment. When you sell digital services to consumers (individuals without a VAT number) in the EU:

The Rule

Since January 1, 2015, digital services sold to EU consumers are taxed in the consumer's country at that country's VAT rate.

The €10,000 Threshold

If your total B2C sales of digital services and distance sales of goods to consumers in other EU countries are below €10,000 per year, you have two options:

1. Charge Dutch VAT (21%) on all sales — regardless of the customer's country. This is the simplest approach.
2. Register for OSS and charge the customer's country rate — even though you are below the threshold.

Once you exceed the €10,000 threshold, you must charge the customer's country rate.

The OSS Scheme (One-Stop Shop)

OSS

How OSS Works

1. Register for OSS through the Belastingdienst portal (Mijn Belastingdienst Zakelijk)
2. Charge the correct VAT rate for each customer's country
3. File a quarterly OSS return (separate from your regular VAT return)
4. Pay the total VAT amount to the Belastingdienst
5. The Belastingdienst distributes the VAT to each EU country

OSS Return Schedule

OSS returns must be filed even if there are no sales in a quarter (submit a nil return).

Advantages of OSS

• One registration instead of up to 26 EU registrations
• One quarterly return instead of multiple foreign returns
• One payment to the Dutch Belastingdienst
• No foreign VAT audits (audits are conducted by the Dutch tax authority)

Determining the Customer's Location

To charge the correct VAT rate, you need to know where the customer is located. The EU requires two pieces of non-contradictory evidence:

For sales below €100,000 per year (across all EU countries), you may rely on a single piece of evidence (typically billing address or IP geolocation) — the "one-item-of-evidence" simplification.

Platforms and Marketplaces

If you sell digital services through a platform (Apple App Store, Google Play, Etsy, Gumroad, etc.), the platform may be treated as the "deemed supplier" for VAT purposes. In this case:

• The platform is responsible for charging and remitting VAT to the consumer
• You invoice the platform without VAT (the platform handles it)
• Your revenue from the platform is reported as a B2B transaction

Check each platform's terms — most major platforms handle VAT for digital products automatically.

Common Platforms and VAT Handling

Non-EU Customers

When selling digital services to consumers outside the EU:

• You charge no VAT (outside the scope of EU VAT)
• Report in box 1e of your VAT return
• You can still deduct all related input VAT
• No OSS or other reporting requirements

E-Books and Digital Publications

Since 2020, EU member states can apply reduced VAT rates to e-books and digital publications. The Netherlands applies:

• 9% on e-books and digital newspapers/magazines (same as physical equivalents)
• 21% on other digital services

This ended the previous anomaly where a physical book was taxed at 9% but the same book as a PDF was taxed at 21%.

Common Mistakes

1. Charging Dutch VAT to all EU consumers — Once you exceed the €10,000 threshold, you must charge the customer's local rate. Charging the wrong rate means you owe the difference.
2. Not registering for OSS — Without OSS, you would need to register for VAT in every EU country where you have consumers. OSS is almost always the better option.
3. Treating all online work as "digital services" — Consulting, coaching, and custom development are regular services, not digital services. The VAT rules are different.
4. Forgetting to file nil OSS returns — Even if you had no sales in a quarter, you must still file an OSS return. Missing returns can lead to deregistration.
5. Not collecting location evidence — You need at least one (or two for larger sellers) pieces of evidence of the customer's location. Implement geolocation or billing address collection in your checkout.

What to Read Next

• Reverse-Charge Mechanism — For B2B digital services across borders
• Intra-Community Transactions — Full EU cross-border rules
• Reclaiming VAT — Getting input VAT back on your digital business costs
• Common VAT Mistakes — More pitfalls to avoid