Dutch VAT on sponsoring
Sponsoring and gifts are ubiquitous. The brand name on the back of your favorite football player, a logo on your pen; sponsoring seems to be everywhere. Yet, VAT on such sponsoring seems to be less evident.
Generally, sponsoring is the remuneration for an advertising service provided by a company or association. Since tax authorities levy VAT on every advertising service, they thus charge Value Added Tax on sponsoring as well.
Nonetheless, many associations are exempt from VAT if their main activities consist of fundraising. This exemption is also in order for their other activities, even though they might generate profit for the association. Therefore, the VAT exemption on income is subject to two thresholds. For the delivery of goods, the threshold is EUR 68 067. All other services, including sponsoring, are exempt from VAT if the income remains under the EUR 22 689 threshold. With the limit of EUR 50 000, the latter is significantly higher in case of sports associations.
In order to be eligible for this VAT exemption, your enterprise should qualify as one of the following organizations:
- Sports association;
- Sociocultural organization;
- Educational organization;
- Youth work;
- Union or a religious, politic or charity organization;
On contrary, enterprises that are not eligible for the VAT exemption must file 21% VAT on sponsoring. Even for enterprises of which the main activities meet the 6% VAT qualifications, lower VAT rates on sponsoring do not apply.
Correcting wrong invoices
Everyone can make mistakes. Firstly, VAT might be forgotten, which a supplementary invoice may correct. The invoice, calculating the missing VAT, should mention the previous and incorrect invoice.
Second, the invoice may charge VAT, but the wrong amount. You should return such an invoice to the enterprise as soon as possible. Subsequently, VAT will be returned when you receive the correct invoice. If the wrong VAT has already been returned, though, a correction should be made on the next invoice. In addition, you should declare to the organization that you are willing to explain the corrected VAT and to justify this correction to the tax authorities. This cooperative attitude is always to your benefit. After all, Dutch tax authorities scrutinize (wrong) tax returns.
Please do not hesitate to contact us for more information on VAT or taxes in general. We are pleased to be of assistance.