The Netherlands: Administrative Decree on artists and VAT

On 13 June 2007 the Netherlands tax authorities issued an updated Decree on artists and their VAT position. According to the Decree artists that operate independently (?zelfstandig?) are for VAT purposes to be considered as entrepreneur. In certain cases wage tax will be withheld on payments to independent artists and the tax authorities approve that artists which are covered by the wage tax rules for artists (as defined in Art. 5a of the Wage Tax Act) stay out of the VAT. However, a condition is that they do not deduct input VAT, and also do not charge VAT for any performance in the Netherlands.

Some specific situations are the following:
– private performances: a performance which is agreed with an individual for his or her own purposes is excluded for wage tax purposes. If the artist charges no VAT where the performance is covered by the wage tax act, the artists should also in the case of private performances not charge VAT.
– Entrepreneur for income tax purposes: if the artists has obtained a declaration which for income tax purposes clarifies that the artist is either entrepreneur for income tax purposes or has obtained a declaration that he is acting as director of his own private company (BV), then the artist should charge VAT on all his actions.
– Foreign artists are since 2007 no longer subject to Netherlands wage tax. They can therefore not apply for an exemption to the obligation of charging Netherlands VAT (if they are entrepreneurs in their home country).
– Orchestras and pop groups who operate in a more less stable composition and participate in society must charge VAT on their fees. If each member of the group is considered as an artist in the sense of the Wage Tax Act, an exception for charging VAT may be applicable.