For VAT purposes
Simplified ABC transaction for VAT purposes
The so-called ‘ABC-transaction’ is important to consider when you declare your international transactions in your VAT or ICP return.
This ABC-transaction always concerns at least three companies from one or more countries. Company A sells its goods to company B, company B sells the same goods to company C. The question is who has to pay VAT and where is the VAT due?
In the above-mentioned transaction, the goods go straight from company A to company C. Normally, when the transport occurs within the framework of the supply between company A and company B, company B has to register itself for VAT purposes in the country where company C is. Meaning that he has to submit a VAT return in that country.
When the supply meets the conditions, the simplified ABC transaction is applicable, there is no necessity for registration and the filing of a VAT return.
Conditions for the simplified ABC transaction
Registration is not necessary, meaning that company B can submit its VAT return in the Netherlands when it complies with the following conditions:
The company situated in the Netherlands must be the middleman;
The company is already registered for tax purposes in the Netherlands;
The company does not want to register in the country of company C;
The company must be able to provide evidence of having bought the goods from company A with the aim of successively selling them to company C;
All three companies must have VAT numbers in different EU-countries; You make an arrangement with A in respect of the transport of the goods.
The goods have to go directly from A to C in the country of C.
The intra-community supply to company C must be declared in the VAT return.
The biggest advantage is that company B does not have to register itself for VAT purposes in each country it conducts business with. The simplified ABC transaction is not applicable when company B is already registered for VAT purposes in the country of company C.
How does it work?
Company B will receive an invoice from company A with 0% VAT, this purchase should not be included in the VAT return of company B. The transaction from company B to company C is designated as an intra-community transaction (please see our article regarding this subject). Company B must send an invoice without VAT. These kinds of invoices have to meet extra conditions (please see our article about invoice requirements). The most important extra requirements are:
The invoice should state the VAT identification number of company C;
The invoice should state:
When this is done, company C is informed that the simplified ABC transaction for VAT purposes is applicable.
YOUR BUSINESS TOOLKIT
FREE ACCESS TO ALL THE THINGS YOU NEED TO KNOW
Our experts have combined their knowledge and strengths to create a tool we call the Business Toolkit.
The Business Toolkit will help you and entrepreneurs from around the globe to truly understand the Dutch market, regulations and laws. And will enable you to take a deep-dive into the topics displayed below.
This way you will easily get up to speed with our Company formation process, Dutch Tax & Accounting and our corporate services.
Make sure to check out our handy checklists, explainer video's and extensively written Whitepapers too!