Dutch rule on VAT on movie and video productions to be revoked in 2015
05 March 2014
Posted by: Author: Maurice Schouten
Author: Maurice Schouten
In the Netherlands, there is a specific decision by the Dutch Ministry of Finance for the VAT treatment of the production and supply of movies, video productions or live broadcasting. This is known as thePrintprijs decision.The Printprijs decision was made in the 70s and allows, under specific conditions, the calculation of the VAT due on a price per meter film or broadcast per minute.
The Printprijs decision is especially interesting to organizations that cannot (partially) reclaim VAT since they will pay VAT based on the price of the print instead of that based on the full purchase price of a movie or video production. The background of the decision supports VAT-exempt public broadcasting companies by helping them reduce their VAT costs.
The Dutch State Secretary decided to revoke the Printprijs decision on 1 January 2015. As of this date, the decision may not be used, and regular VAT rules will apply to movies, video productions and live broadcasting. Revoking this decision will not only impact public broadcasting companies but all VAT-exempt users of the Printprijs decision. The VATable entrepreneurs who use this decision will also be affected since they need to (pre-) finance more VAT due. In that regard, we recommend that current agreements be reviewed with production companies and renegotiated where needed.
Transition period for Public Broadcasting companies
In the Netherlands, there were specific VAT rules for VAT-exempt companies based on when they should self-assess VAT in case of in-house productions (also known as the integration supply). However, costs directly related to these in-house productions can be deducted as well. The combination of the Printprijs decision and the integration supply resulted in significant VAT savings for VAT-exempt companies that use the Printprijs decision. On one hand, they used the Printprijs decision to self-assess a low amount of VAT due and on the other hand, they fully reclaimed the input VAT incurred directly related to these in-house productions.
The VAT integration supply regulation has been revoked on 1 January 2014. Consequently, there is no need for VAT-exempt companies, including public broadcasting ones, to self-assess VAT due on in-house productions. However, they can also not reclaim the input VAT incurred directly related to these in-house productions. As a result, the VAT costs for public broadcasting companies will significantly increase, and therefore the Dutch State Secretary will allow public broadcasting companies to continue using the VAT integration supply rules in 2014. We believe that the decision for a transition period for public broadcasting companies only may have a broader scope and may be of benefit to other VAT-exempt organizations as well.
This article first appeared on lexology.com.