No-shows and cancellations: when does VAT sit on the bill?
Written by Ilias Aarrass5 min read · Published on · Last reviewed on 
In short
A no-show fee is usually taxed at the rate of the booked service, but a fee for a cancellation before the service started is in principle not.
- VAT attaches to a supply: someone who does not cancel and stays away pays for time that stood ready, and that carries VAT.
- With a real cancellation the fee is fixed compensation for cancelling rather than payment for a supply, and so untaxed.
- On a prepayment you owe the VAT on receipt; if the client cancels you correct that VAT, preferably with a credit invoice.
- Without no-show and cancellation rules in your terms and your confirmation, the bill itself already stands on weak legal ground.
Every hairdresser, trainer, photographer and coach knows it: a fully booked slot and a client who stays away without notice. More and more freelancers therefore charge a no-show fee or use cancellation terms, and the question follows: does VAT go on that? The answer is more precise than you would think, because tax distinguishes between payment for a service that stood ready and true damages. The main line is fortunately easy to remember.
The main rule: if the service stood ready, VAT applies
VAT is levied on payments for supplies. With a no-show the client paid for the right to your time and availability, and you genuinely delivered that: the chair stood ready, the hour was reserved. A no-show amount or unrefunded appointment is therefore taxed as a rule, at the same rate as the service itself. European case law on unused flight tickets points the same way: failing to appear does not turn the payment into damages. If the client does cancel, it is the other way round: a cancellation fee for a service that had not yet started does not count as payment for a supply under that same case law, and therefore stays untaxed.
When it is untaxed damages after all
What stays untaxed is an amount detached from any supply, purely compensating loss. Think of a client cancelling a large project early and contractually paying compensation for your lost revenue, with no work or availability standing against it. Rule of thumb: cancelling before the service started points to an untaxed payment; staying away without cancelling, or buying out a service already running, points to taxable revenue. Grey areas exist, certainly with partly executed projects; if you charge without VAT in such cases, be sure of your ground and record the arrangement in writing.
| Situation | VAT? |
|---|---|
| Client fails to appear, no-show fee per your terms | Yes, at the service rate |
| Late cancellation within 24 hours, part of the price due | Usually not: a cancellation fee |
| Deposit retained after cancellation before the service | Usually not; you correct the VAT on the prepayment |
| Contractual compensation for lost revenue, no supply remains | No, damages |
Deposits and refunds
On a prepayment or deposit you owe the VAT at the moment of receipt, as explained in booking advances and deposits. If the client cancels and you refund, you correct that VAT in your return, preferably with a credit invoice. If you retain the deposit (partly) as cancellation costs, that is compensation for the cancellation rather than payment for a supply; in principle no VAT is then due on the retained part, so you correct that VAT as well. Practically: process no-shows through an ordinary invoice or receipt with VAT, and your records stay right by themselves.
Frequently asked questions
Which VAT rate applies to my no-show amount?
The same rate as the service booked: 9% for the haircut, 21% for the shoot or training. The no-show fee follows the supply it belongs to; see also which VAT rate applies.
I work VAT-exempt in healthcare. Is my no-show fee exempt too?
That is not certain. If the missed-appointment fee follows the booked treatment, as this article explains for other services, the exemption would logically follow too; others argue it is a separate payment for reserved time outside the care exemption. The tax authority has no clear line, so record your approach and check it with your bookkeeper, certainly alongside the care exemption.
May I charge 100% for a no-show?
Legally you may in principle charge what was clearly agreed in advance, within reason towards consumers. Many freelancers pick 50 to 100% for no-shows and free cancellation up to 24 or 48 hours ahead; strict enough to steer, reasonable enough to keep the relationship intact.
How do I book a no-show fee I eventually waive?
If already invoiced, issue a credit invoice; that corrects revenue and VAT neatly. If never invoiced, there is nothing to book, though tracking waived no-show revenue somewhere is useful insight.
Sources
- VAT on damages and voluntary contributionsBelastingdienst · belastingdienst.nl
- Knowledge group position on VAT and cancellation feesBelastingdienst · kennisgroepen.belastingdienst.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
