10 attention points for the upcoming VAT rate changes

18/09/24

On Budget Day, Tuesday 17 September 2024, the government presented the annual Tax Plan 2025. It has been announced that the reduced VAT rate of 9 per cent on cultural goods and services, books, magazines, sports, and accommodations will be abolished as of 1 January 2026. These services will be subject to 21 per cent VAT. See our Tax News article for more information. This will have a significant impact on businesses in the cultural sector, media, sports, hotels, holiday homes, and possibly also employment agencies. Businesses will need to timely anticipate these changes. We have listed below the 10 most important attention points for these VAT rate changes. For more information or questions, please contact your PwC advisor.

1. Pricing

Consider the impact of the VAT rate increase on pricing and determine whether and how this should be passed on to the consumer. Consumer prices will need to be determined including 21% VAT.

2. Admin

Ensure that the systems, such as cash register sytems and accounting software, are updated in a timely manner to correctly process the VAT rate increase.

3. Invoicing

Invoices must meet the legal invoicing requirements and mention the correct VAT taxable amount, the correct VAT rate and the correct VAT amount. Action this timely to avoid incorrect invoices. This is particularly relevant for supplies to business consumers as in most cases, there is no invoicing requirement for supplies to private consumers.

4. VAT return

Businesses currently applying 9% VAT are reporting this in section 1b of the periodic Dutch VAT return. After the increase to 21%, the VAT must be reported in box 1a instead.

5. Subscriptions, season tickets, proposals etc.

When preparing proposals for supplies that will take place (partially or fully) in 2026, it is important to consider the correct VAT rate. This is for example relevant for certain types of subscriptions and season tickets.

6. Existing contracts

Existing long-term contracts may also be affected by the VAT rate increase as of January 1, 2026. It is important to determine the impact and discuss it with (business) customers where necessary.

7. Advance payments

Determine the impact of advance payments taking place before January 1, 2026. It is important to timely determine whether and how the proposed transitional arrangement applies to such advance payments.

8. Vouchers

Analyze the VAT treatment of providing or selling vouchers before the VAT rate change. In some cases, it may be possible to apply the reduced VAT rate, even if the actual supply takes place after January 1, 2026.

9. Timely purchases

Consumers and businesses without a right to deduct VAT or with a limited right to deduct VAT, such as schools and healthcare institutions, may consider timely purchases before the VAT rate increase.

10. Employee benefits

Businesses organizing staff benefits, events, or gifts such as concert tickets or hotel stays may benefit from a VAT advantage through timely purchases.