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Domestic reverse charge – Not necessary to get a Dutch VAT number from your customer?

Your company does not have any fixed establishment in the Netherlands but has activities (i.e. domestic supplies of goods and services) in that Member State. In principle, the reverse charge applies as long as your invoices are addressed to Dutch based taxpayers. One of them does however not provide you with his Dutch VAT number and you therefore wonder whether you should rather charge Dutch VAT.

Find out what the position of the Court of 's-Hertogenbosch is in that matter.

VAT Reverse charge in The Netherlands

Member States in which the VAT is due may provide that the person liable for the payment of VAT is the person to whom the goods or services are supplied where the transaction is carried out by a taxable person who is not established in the country in which the VAT is due.

Reverse charge does basically apply to supplies of goods or services carried out by suppliers not established in the Netherlands provided the customer is a taxable person established in the Netherlands.

In a recent decision (case 19/00319 of 23/04/2020), the Court of 's-Hertogenbosch reminds that the legal texts do not include any condition about the (Dutch) VAT number of the customer. In other words, the correct (Dutch) VAT identification number of the customer cannot be seen as a material condition for the application of the reverse charge mechanism. Therefore, the supplier cannot be blamed for not having this information according to the Court inasmuch as the client is undoubtedly engaged in an economic activity falling within the scope of VAT.

Where, however, it is found that the supplier wants to conceal identity of the actual client enabling him potential fraudulent practices, the reverse charge may not be relied upon in order to avoid its VAT liability.

Valid VAT number

The aforementioned case-law may prove to be very useful in case of a litigation. Nevertheless, obtaining a valid Dutch VAT number is obviously one of the best ways to ascertain that your Dutch based customer qualifies as an entrepreneur. It is therefore advisable to request and obtain that information in all cases where the reverse charge is applied.