VAT on energy: a guide for businesses
Direct answer
VAT on energy (btw in Dutch) is the value-added tax the supplier charges on your energy bill, at the general Dutch rate of 21 percent. That rate is applied to the whole amount, so also to the energy tax, meaning you pay tax on tax. Business customers can usually reclaim this VAT as input tax; consumers cannot.
- Clear definition
- Data-driven assessment
- Risks and opportunities visible
- Practical next steps
VAT on energy: scattered information versus Energy Intelligence
Every energy bill shows a VAT line. For a household it is a final cost: the VAT is part of the price and cannot be reclaimed. For a business it is different. An entrepreneur who is registered for VAT looks at the amount excluding VAT, because the VAT is usually settled with the Dutch tax authority. That difference determines how you read prices and which amounts you use when purchasing energy.
- The supplier charges 21 percent VAT on the total energy bill, including the supply and the energy tax.
- Because the VAT is also calculated over the energy tax, you pay tax on tax.
- A VAT-registered business can usually deduct or reclaim the paid VAT as input tax; a consumer cannot.
Insight
Traditional approach
Information is scattered across portals, documents, invoices or separate spreadsheets.
Modern approach
Data, context and interpretation are brought together into a clear decision picture.
Decision-making
Traditional approach
Choices are made based on averages, assumptions or occasional analyses.
Modern approach
Scenarios, KPIs and current measurement data make the trade-off more concrete and repeatable.
Follow-up
Traditional approach
Actions often stay non-committal or disappear into separate reports.
Modern approach
Follow-up actions, monitoring and reporting are linked to the same energy data.
How is VAT on energy calculated?
Your energy price consists of three parts: the supply, the energy tax and the VAT. The supplier first adds the supply and the energy tax together and applies the general VAT rate of 21 percent to that total. The VAT is therefore also charged over the energy tax. In practice you pay tax on tax. This works the same way for electricity and for gas. The supplier remits the collected VAT to the Dutch tax authority; on your invoice the VAT amount is shown separately, next to the amount excluding VAT.
- The energy price consists of supply, energy tax and VAT.
- The VAT is 21 percent, the general rate in the Netherlands.
- The VAT is calculated over the total, including the energy tax.
- The invoice shows the amount excluding VAT and the VAT amount separately.
What does the difference mean for businesses and consumers?
For a consumer the VAT is a fixed part of the price. A household cannot reclaim the VAT on energy and therefore pays the amount including VAT. A VAT-registered business does pay the VAT first, but can usually deduct it as input tax in the VAT return. The VAT paid on the energy bill is then settled against the VAT the business charges itself. On balance the VAT does not weigh on the energy costs. This is why businesses compare energy prices excluding VAT, while consumers look at the price including VAT.
- A consumer pays the price including VAT and cannot reclaim anything.
- A VAT-registered business usually deducts the VAT as input tax.
- Businesses therefore compare prices excluding VAT.
- Consumers compare prices including VAT.
Where are the limits?
Deducting the VAT is not automatic. The right to deduct it as input tax only applies to the VAT on energy that you use for business and for VAT-taxed activities. If your organisation performs exempt services, for example in healthcare or education, the VAT is wholly or partly non-deductible. With mixed use, such as premises that are partly private and partly business, you may only deduct the business share. The level of the rate does not depend on your situation: the general rate applies to the supply of energy. Whether you can reclaim the VAT depends on your own VAT position.
- Deduction only applies to VAT-taxed business use.
- With exempt activities the VAT is non-deductible or only partly deductible.
- With mixed private and business use only the business share counts.
- The rate is independent of your situation; the right to deduct is not.
Curious what this looks like with your own data?
In a no-obligation call, a specialist looks at your meters, sites and energy questions with you. Response within one business day.
Search the knowledge base
Find the answer to your question.
Search using your own words. Abbreviations and spelling variants are recognised, so EMS also finds the articles on energy management systems.
Topic
