Automating VAT checks: how to prevent Dutch VAT errors

What does a VAT check in pre-accounting involve?

A VAT check in pre-accounting means verifying that every invoice is booked with the right rate, the right VAT code and the right VAT amount. The Dutch VAT return (btw-aangifte) is ultimately a sum of all bookings in a period. If an invoice is on the wrong VAT code, the amount ends up in the wrong box of the return, and you often cannot see that any more when filling it in.

Checking afterwards is therefore laborious. If you only go through the VAT codes per box just before the deadline, you have to trace deviations back to individual bookings, reopen documents and sometimes still ask the client questions. The earlier a VAT error is flagged, ideally at the moment the invoice is processed, the smaller the chance it reaches the return and the less correction work is needed later.

Which VAT rates and situations do you need to recognise?

In the Netherlands you need to recognise at least the standard rate of 21%, the reduced rate of 9% and the zero rate of 0% when booking, plus situations where no Dutch VAT is charged. The reduced rate applies to most food products, among other things; the zero rate mainly to exports outside the EU and supplies of goods to businesses in other EU countries.

There are also situations in which VAT is declared not by the supplier but by the customer, or in which no VAT applies at all. An invoice without a VAT amount is therefore not automatically wrong, but it does need the right code. Each situation belongs in a different box of the return. Situations you need to tell apart when booking are:

• Standard rate 21% and reduced rate 9%.
• Zero rate 0%, for example for exports or intra-EU supplies.
• Domestic reverse charge, such as for subcontracting in construction.
• Purchases and services from other EU countries and from outside the EU.
• Exempt supplies and fully VAT-exempt administrations.

How does reverse charge work and what does it mean for the booking?

With reverse charge (btw verlegd) the supplier does not charge VAT, and the customer declares the VAT in its own return instead. The invoice then shows no VAT amount, but does state btw verlegd and the customer's VAT number. In the Netherlands this happens for example with subcontracting in construction; for purchases from businesses in other EU countries and for many services from outside the EU, reverse charge is the standard.

For the booking this means the customer declares the VAT due and, if entitled to deduct, deducts it as input VAT at the same time. Domestic reverse charge goes in box 2a, purchases from the EU in box 4b and from outside the EU in box 4a; the deduction runs through box 5b. Booking such an invoice as an ordinary invoice without VAT misses both the declaration and the deduction. That is why the right reverse charge VAT code is essential.

What is the ICP return and why check VAT numbers via VIES?

The ICP return (opgaaf intracommunautaire prestaties) is a separate report to the Dutch Tax Administration of supplies of goods and services to businesses in other EU countries where VAT is reverse charged. You file it monthly or quarterly, alongside the VAT return. For each customer you list the VAT identification number and the total amount, and the amounts must tie up with box 3b of the return.

A valid VAT number for the customer is a condition for applying the zero rate or reverse charge on EU transactions. With VIES, the European VAT number validation system, you can check whether a number is valid. For purchase invoices from the EU you check the supplier's number in the same way. An invalid number can mean Dutch VAT is due after all, so this check should be a standard part of processing.

How do you check VAT before filing the return?

You check VAT before the return in two layers: per invoice during processing and per period just before filing. The first layer catches errors at the source, the second checks whether the total makes sense and whether all items have been processed. The stronger the first layer, the shorter the second.

A fixed checklist helps you not forget anything, even when different team members prepare returns. The example below assumes a quarterly return, but works just as well for monthly returns. Record client specifics, such as a partial exemption or recurring reverse charge situations, in the administration so they come back with every return.

1. 1Check per invoice that subtotal, VAT amount and total add up.
2. 2Check that the VAT code fits the rate and the situation, such as reverse charge or EU.
3. 3Check the VAT numbers of EU contacts via VIES.
4. 4Make sure all invoices, receipts and bank lines for the period are processed and client questions resolved.
5. 5Compare the VAT position with previous periods and explain large differences.
6. 6Reconcile box 3b with the ICP return before filing both.

How does Autoboeker automate the VAT check?

Autoboeker checks VAT on every invoice it processes, in all connected ledgers. The AI recognises 21%, 9% and 0%, reverse charge, within and outside the EU, VAT-exempt administrations and international VAT situations, and supports ICP. Subtotal, VAT and total are recalculated, VAT numbers are checked against VIES and IBANs are verified. The VAT code is proposed based on the history of the administration.

Autoboeker also checks for missing VAT, a deviating VAT code and a deviating VAT amount, and flags them instead of booking them silently. For Exact Online there are also VAT analysis and reports: the VAT position per administration and per period, in real time, and a VAT overview for the client in the client portal. For Twinfield, SnelStart and e-Boekhouden, VAT recognition and VAT checks do work, but VAT analysis is not available.