Invoicing between members of a Dutch VAT fiscal unity

Within a Dutch VAT fiscal unity, you do not charge VAT on supplies of goods and services between members. The members together form a single taxable person for VAT purposes (article 7(4) Dutch VAT Act 1968), so internal supplies between them are not taxable transactions. You may still invoice internally for administrative purposes, but without VAT.

Why does invoicing between members fall outside VAT?

VAT is a consumption tax that applies to supplies and services between independent entrepreneurs. Once two or more entrepreneurs form a fiscal unity, they are no longer independent for VAT purposes, but count as a single taxable person. A supply from one part of the unity to another part of that same unity is then not a supply between two entrepreneurs, but an internal shift within one taxpayer. There is no taxable event, so no VAT is due.

Do you need to stop invoicing internally altogether?

Not for VAT purposes, but for administration and internal cost allocation it is common to still prepare internal documents or invoices, without a VAT amount. State clearly on such a document that the supply takes place within the fiscal unity and therefore falls outside the scope of VAT. This avoids discussion in an audit and keeps internal cost allocation (for example management fees or recharged accommodation costs) transparent.

Example: Holding B.V. rents office space to Werk B.V., both members of the same VAT fiscal unity. Holding B.V. sends an internal note of € 5,000 without VAT. Without the fiscal unity, VAT would in principle be due here (unless an exemption applies); within the unity it is not.

What happens on the VAT return?

The fiscal unity files one combined VAT return for all members together. Internal supplies do not appear in the turnover or the input VAT of that return: they simply fall outside it. What does appear on the return is VAT on supplies to and from parties outside the unity.

Which supplies do remain taxable?

Supplies to customers outside the fiscal unity

If a member of the unity sells to a customer that is not part of the unity, VAT is due in the normal way. The fiscal unity does not change the treatment of supplies to the outside world; only the internal traffic between the members themselves is outside the scope.

Supplies from or to a group company that is not consolidated

If the group has a company that does not meet the interlinkage conditions and therefore stands outside the fiscal unity, a transaction with that company is an ordinary, taxable supply. A common example: a foreign sister company without a Dutch fixed establishment is not part of the Dutch fiscal unity, and therefore invoices with (or, depending on its own VAT position, without) VAT.

A pure holding without entrepreneurial status

A pure, passive holding company is in principle not an entrepreneur for VAT and cannot independently be a member of the fiscal unity. Supplies from or to such a holding then remain taxable in the normal way, unless the holding does involve itself in managing the operating companies and thereby qualifies as an entrepreneur.

What does this mean for supplementary returns and administration?

If the composition of the fiscal unity changes, for example a member joining or leaving, check whether invoices already sent are still correct. If VAT was wrongly charged on a supply that has since become internal, or wrongly not charged on a supply that no longer falls within the unity, a supplementary return (suppletie) may be needed. Because the fiscal unity arises and ends by operation of law, this can occur even before a ruling has been issued. See VAT fiscal unity by operation of law for the effect on past periods.

Keep a clear distinction in your records between internal notes (without VAT, within the unity) and external invoices (with VAT, to third parties). That simplifies both your own checks and any review by the Belastingdienst.

Frequently asked questions

Should I still show a VAT amount on an internal note?

No, you do not charge VAT on a supply between members of the same fiscal unity. Do state clearly on the internal note that it concerns a supply within the fiscal unity.

What if I accidentally charged VAT within the unity?

Wrongly charged VAT can affect the return of both parties. Correct it as soon as possible and, if in doubt, discuss the required steps with an adviser or the Belastingdienst.

Do supplies to a non-consolidated holding also stay outside the scope?

No. Only supplies between members that actually belong to the fiscal unity fall outside the scope. A company that is not consolidated, even if it belongs to the same group, is treated as an ordinary third party for VAT.

Next step

Unsure whether your group meets the three forms of interlinkage? Read Interlinkage in the VAT fiscal unity. Then use our tool to assess the interlinkage and prepare the request letter. More on the request itself in How to request a VAT fiscal unity.