Omzetbelasting vs. VAT (BTW): what is the difference?
Omzetbelasting (sales tax) and BTW (VAT) are often used interchangeably, but are they the same? Read the difference, how the system works and what it means for your business.
Omzetbelasting and BTW: what is the difference?
Omzetbelasting (sales tax) and BTW (belasting over de toegevoegde waarde — value added tax) are in the Netherlands exactly the same — they are two names for the same tax. Omzetbelasting is the official legal term from the Wet op de omzetbelasting 1968 (Sales Tax Act 1968). BTW is the common name used in practice and by the Belastingdienst. In your return to the Belastingdienst it is officially called "aangifte omzetbelasting" (sales tax return), but everyone calls it the "btw-aangifte" (VAT return). VAT is an indirect tax levied on the value added at each stage of the production and trade chain. The consumer ultimately pays the full VAT — entrepreneurs remit the difference between VAT received and input VAT paid. In the Netherlands three VAT rates apply: 21% (standard), 9% (reduced) and 0% (export/intra-Community).
How does VAT (omzetbelasting) work?
VAT is an indirect tax levied on the value added at each stage of the production and trade chain. The consumer ultimately pays the full VAT — entrepreneurs remit the difference.
The VAT system step by step
- Supplier sells raw materials for € 100 + € 21 VAT = € 121
- Manufacturer sells product for € 200 + € 42 VAT = € 242
- Remits: € 42 - € 21 (input VAT) = € 21
- Retailer sells to consumer for € 300 + € 63 VAT = € 363
- Remits: € 63 - € 42 (input VAT) = € 21
- Consumer pays € 363 (including € 63 VAT)
Total VAT remitted: € 21 + € 21 + € 21 = € 63 — exactly the VAT the consumer pays.
VAT rates in the Netherlands (2026)
| Rate | Percentage | Applications |
|---|---|---|
| Standard rate | 21% | Most goods and services |
| Reduced rate | 9% | Food, books, medicines, hairdressers, painters/plasterers |
| Zero rate | 0% | Exports, intra-Community supplies |
| Exempt | — | Medical services, education, financial services |
Difference between 0% and exempt
With 0% VAT you are still VAT-registered and may deduct input VAT. With exempt supplies you may not deduct any input VAT.
Input VAT: reclaiming VAT
As an entrepreneur you may deduct the VAT you pay to suppliers (input VAT) from the VAT you charge to customers. The difference is remitted — or you receive it back if you have paid more VAT than you received.
What may you deduct?
- VAT on purchases for your business
- VAT on business costs (office rent, fixtures, software)
- VAT on fuel costs (company car)
- VAT on purchase of business assets
What may you not deduct?
- VAT on private expenditure
- VAT on business lunches and business gifts (limited deductible)
- VAT on exempt supplies
Common mistakes
1. Wrong rate on invoices
Make sure you apply the correct VAT rate. Selling food at 21% instead of 9% leads to errors in your return.
2. VAT on EU purchases not reverse charged
Are you purchasing services from an EU supplier? Then you must reverse charge the VAT: you declare the VAT and also deduct it in the same return. This is called the reverse charge mechanism.
3. No VAT return with zero revenue
Even if you have no revenue in a quarter, you are required to file a nil return. Read our step-by-step guide for the VAT return.
Small business scheme (KOR)
Is your revenue no more than € 20,000 per year? Then you can opt for the small business scheme (KOR — kleineondernemersregeling). You then do not charge VAT, do not file VAT returns, but also cannot deduct input VAT.
VAT returns with Giroo
Giroo automatically calculates your VAT payable and input VAT. With the VAT return module you submit directly to the Belastingdienst via Digipoort. No manual calculations, no mistakes.