VAT & KOR

What is VAT (BTW)?

The tax you add to your prices, collect from customers, and pass on to the tax office. It never belongs to you.

3 min read

In plain English

VAT (in Dutch: BTW, or omzetbelasting) is a tax on selling things. It is not a tax on you or on your profit — it is a tax the government puts on what your customer buys.

Because the tax office cannot collect a little bit of money from millions of shoppers, businesses do it for them. You add VAT to your price, your customer pays it, you hold it briefly, and then you send it on. You are a collector, not the payer.

Income tax is completely different: that one is about your profit and it really is your money leaving. VAT that sits in your bank account was never yours.

Your customer

Pays €1.210 for a €1.000 job

You

Keep €1.000, hold €210 aside

Belastingdienst

Receives the €210 VAT

VAT travels through your account. It never stops there.

Why it matters

The money on your bank account is bigger than your actual income — spending it is the classic first-year mistake.
You can reclaim the VAT you paid on business purchases, which lowers what you send to the tax office.
Charging the wrong rate means correcting invoices later, often after the customer has already paid.

When it applies

From your first invoice, unless you joined the KOR small business scheme.
On sales to Dutch customers. Sales abroad follow separate rules — check before invoicing.
You report it per quarter for most small businesses, one month after the quarter ends.

A practical example

A €1.000 design job

You agree a price of €1.000. On the invoice you add 21% VAT, so the customer transfers €1.210.

That same quarter you bought a €500 laptop and paid €105 VAT on it.

In your VAT return you report €210 collected minus €105 paid, so you transfer €105 to the tax office. Your actual revenue was €1.000 — the rest was never yours.

Common mistakes

Treating the full transfer as revenue and spending the VAT part.
Reclaiming VAT without a proper invoice — no invoice, no deduction.
Assuming everything is 21%. Some food, books, and services are 9%.
Filing late. Fines apply even when you owe nothing.

Knowledge check

A client pays your €1.210 invoice (€1.000 + 21% VAT). How much of that is your revenue?

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Back to the Learning Hub Tax glossary

These explanations are simplified for clarity and are not tax advice. Rules change; check with the Belastingdienst or ask Ardel for a review.