A few weeks ago we informed you in a news release that although there are intentions to find alternative coverage for the increase in the VAT rate on lodging, culture, media and sports to 21% proposed in the Tax Plan, the Tax Plan, and the transitional law relevant in this context, has, for the time being, simply been passed by the House of Representatives without any substantive changes being made on this point (i.e., including the intended increase in the rate as of January 1, 2026).
The transitional law means that the time when the supply takes place determines the application of the VAT rate. This would mean that the 21% rate should already be applied in 2025, namely on advance payments for goods and services that are not delivered until 2026. However, the government is looking for an alternative interpretation for the VAT rate increase on culture, sports and media. This raises questions regarding transitional law; if an alternative interpretation is found, the 21% rate would not have had to be applied to advance payments.
The State Secretary announced during the discussion of the Tax Plan in the Senate that the operation of the transitional law will be suspended for (at least) six months for culture, sports and media (not for lodging). This will be confirmed in a policy decision. As a result, the 9% rate will continue to apply at least until July 1, 2025 on advance payments for the aforementioned goods and services delivered in 2026. By that time, more will hopefully be clear about an alternative interpretation of the VAT rate increase on culture, sports and media. Should the increase in the VAT rate nevertheless 'simply' go ahead, this will not affect advance payments made until July 1, 2025 to which the 9% rate is still applied.
Do you have any questions in response to the above? Please feel free to contact us through your relationship manager, by email at btw@govers.nl, or by phone at 040 - 2 504 504. Of course, you can also contact us with all your other tax questions.