EU small business scheme: using the VAT exemption in other EU countries

What the EU scheme actually does

The ordinary Dutch small business scheme lets you work exempt in the Netherlands below € 20,000 of turnover. The EU variant does the same for your turnover in other EU countries: you supply there without VAT and do not have to register in that country. You choose per country whether to take part, because every EU country has its own turnover threshold for small businesses.

There are two limits. The first is a hard European one: your total turnover across the whole EU, the Netherlands included, may not exceed € 100,000 in a calendar year. The second is the national threshold of the country where you use the exemption; that varies per country and usually lies between € 25,000 and € 85,000. Exceed either one and the exemption for that country lapses and you charge VAT again.

Registering and the EX number

You register with the Dutch tax authorities through the business portal, not with the tax authority of the other country. In your application you state in which EU countries you want to use the exemption and what your turnover was in the current and previous year. If you meet the conditions, you receive a participation number with the suffix EX. That number is intended for communication between the tax authorities.

You must be established in the Netherlands, and if you have establishments in several EU countries, your main establishment must be in the Netherlands. If you later want to add a country or stop, you report that the same way. Allow for processing time: the exemption only starts once the destination country has confirmed your participation, so arrange it well before your campaign or webshop goes live.

The quarterly report

If you take part, you file a report each quarter with your turnover in all EU countries where you do business, the Netherlands included. That report must be in within one month after the end of the quarter. It is not a return on which you pay: it serves to monitor whether you still stay under the limits. If you do not file it or file late, your participation can be ended.

That does mean you must be able to break your turnover down per country. Set your bookkeeping up for it straight away, with separate ledger accounts or labels per country, so that each quarter takes you a few minutes. For webshops that usually follows automatically from the delivery address, see bookkeeping for the online shop.

When you are better off not starting

As with the Dutch scheme: charging no VAT also means deducting no VAT on that turnover. If you invest heavily in equipment, stock or advertising, the exemption can cost you more than it brings in. Work it out before you register, especially if your webshop is growing; see also filing VAT with no turnover and the small business scheme.

If you mainly supply companies you do not need the scheme: with a valid VAT number you reverse-charge and your invoice already carries no VAT. Do always check that number, see checking a VAT number in VIES. And if you sell digital services to consumers, compare the EU scheme with the one-stop shop from VAT on digital services and the OSS scheme; which of the two works out better depends on your cost side and on the rates in your customer's country.

Frequently asked questions