Agriculture regime for VAT
Earlier this year we mentioned that the Dutch tax authority was planning to abolish the Dutch agriculture regime for VAT. The plan has become reality and the regulation will be abolished effectively as per 1 January 2018.
The regime exempted farmers, livestock farmers, gardeners and foresters from Dutch VAT. Following the abolishment of this regime the aforementioned agrarians need to start up a VAT administration. On the other hand this means that they can deduct VAT charged to them (input VAT) as per said date.
Effects on enterprises outside the agriculture sector
The abolishment of the agriculture regime also affects several enterprises not directly active in agriculture. Several services to (livestock) farmers, gardeners and foresters were subject to the lower tariff (6%). This included (but is not limited to) services by agricultural contracting firms, breeding services, inspection and research related to artificial insemination and embryo transplantation as well as services provided by accounting and tax consultancy firms.
With the abolishment of the agriculture regime in VAT these services are subject to the regular tariff (21%). On some occasions, the regular tariff will be applicable although no deductions are allowed. This is the case if the services are provided in before 1st January 2018.