VAT on hospitality
The Dutch VAT charged on the provision of food and drink to persons temporarily present in a catering establishment (e.g. a hotel, café or restaurant) is not deductible neither for the private nor for the business customer. This exclusion from the general right to deduct VAT for businesses even applies when an entrepreneur has hired a catering company providing the food and drink at a special location, such as a boat or a trade fair. The VAT charged on room hire, overnight stays, furnishing of the hall, use of the sound system, reception of guests and suchlike does not fall under this specific deduction exclusion. It is possible however that for the deducted VAT on these costs a correction must be made by virtue of the Dutch Decree on the Exclusion of VAT Deduction (‘BUA’)
Recharging catering costs & VAT deduction
If the provision of food and drinks is outsourced to an entrepreneur who outsources this service to another entrepreneur, the same service (the catering service: the provision of food and drinks) is subsequently provided. This led to an undesirable deduction limitation under the current legal text of the Dutch VAT Act.
In anticipation of amendments to the legislation, it has also been approved for 2023 that an entrepreneur may deduct the VAT charged to him on the catering service, provided that this entrepreneur does not purchase the supply as an end consumer and he in turn provides the food and drinks to someone else for compensation and charges VAT for them. This approval will be codified in law as of January 1, 2024. The law then stipulates that there is a right to deduct this 'catering VAT' if the VAT is charged to an entrepreneur who then provides this catering service to someone else for consideration
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