VAT balance
The VAT balance (btw-saldo) is the net VAT payable or refundable after offsetting VAT due and deductible VAT.
What does VAT balance mean?
The VAT balance (btw-saldo) is the net VAT payable or refundable after offsetting VAT due and deductible VAT.
The return period may differ from the financial year. Reconciliation between the ledger and the returns filed is needed; VAT is normally not turnover or cost where it is fully deductible.
How does it work?
The VAT balance is the position of the VAT accounts at one moment: VAT due on sales less deductible input VAT on purchases. For each period you file that balance and pay it; return and payment are due no later than the last day of the month after the period. What has not been settled at the balance sheet date appears under current liabilities as a tax liability (art. 2:375(1)(h) DCC), or as a receivable when you get money back.
For a business with full right of deduction, VAT is neither turnover nor a cost item: net turnover excludes taxes levied on turnover (art. 2:377(6) DCC). If you have declared too much or too little, you correct an amount of at most € 1.000 in the next return and a higher amount with the Supplementary VAT return form (Suppletie btw).
Example
A BV files quarterly. Fourth quarter of 2025: VAT due € 31.500 (21% on € 150.000 of turnover), input VAT € 19.200. Payable: 31.500 − 19.200 = € 12.300, by 31 January 2026 at the latest. In February 2026, after the VAT return for the fourth quarter has been filed, a December sales invoice of € 10.000 plus € 2.100 VAT turns out not to have been booked. The actual balance is 12.300 + 2.100 = € 14.400, and that amount appears on the balance sheet at 31 December 2025 as a tax liability. The correction exceeds € 1.000, so the BV files a supplementary return as soon as possible, at the latest eight weeks after the discovery.
In the annual accounts
Current tax liability or receivable on the balance sheet.
Difference from the VAT return
The return is a declaration for one period; the VAT balance is the position in the books on one day. They should agree, but diverge because of invoices booked in a different period than declared, corrections and payments in transit. Reconciling the year's returns with the VAT accounts in the ledger is therefore a fixed step in the year-end closing.
Common mistakes
- Booking VAT as net turnover
- Not reconciling the return and the ledger
What should you watch for?
- Put the total of the year's returns next to the VAT accounts in the ledger and explain every difference.
- If a customer does not pay, you reclaim the VAT paid as soon as it is certain the receivable is uncollectible, and in any case one year after the final payment date (art. 29(2) Wet OB 1968, the Dutch VAT Act). Conversely, you repay input VAT deducted on purchase invoices that you have not paid one year after they became due (paragraph 7).
- In a micro balance sheet the VAT liability is not visible: all liabilities are shown in one item (art. 2:395a(4) DCC). A small legal entity does not have to split its liabilities by type either.
Legal basis and source
Dutch VAT Act 1968 (Wet op de omzetbelasting 1968)
Frequently asked questions
Are amounts on the balance sheet shown including or excluding VAT?
Accounts receivable and payable are shown including VAT, because that is what you receive or pay. Turnover, costs, inventory and fixed assets are shown excluding VAT if the VAT is deductible. The difference runs through the VAT accounts and ends up in the VAT balance.
What if the VAT balance does not agree with the last return?
Find the difference per period and correct it: with a supplementary return, or in the next return if it concerns € 1.000 or less. The balance sheet shows the amount you actually owe.
Read more
Preparing Dutch annual accounts?
Your first set of annual accounts is free, for every size class. Create an account and prepare the annual accounts of your Dutch company under Title 9 of Book 2 of the Dutch Civil Code.
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