Whether you charge VAT on software or SaaS depends on who your customer is and where they are. A business in another EU country pays the VAT itself in its own country. You put VAT reverse charged on the invoice and report the turnover in box 3b and in the EC sales list (ICP). A business customer outside the EU falls outside your Dutch VAT return.
For consumers in other EU countries a threshold of € 10,000 a year applies for the whole EU together. Below it you charge Dutch VAT. Above it you charge the VAT of the customer's country, which you usually pay through the OSS, one return per quarter for all EU countries.
In short
- Business customer in the EU: no VAT on the invoice, but VAT reverse charged and the customer's VAT number. The turnover goes in box 3b and in the EC sales list, in the same period.
- SaaS and software over the internet for consumers are electronically supplied services. Up to € 10,000 a year for all EU countries together you charge Dutch VAT, above that the VAT of the customer's country, through the OSS.
- Custom software that a programmer builds for one customer is mainly human work and therefore not an electronically supplied service. For a consumer in the EU you simply charge Dutch VAT on it.
In this article
- Where do you pay VAT when you sell software or SaaS abroad?
- How do you invoice software or SaaS to a business customer in the EU?
- What applies to a customer outside the EU?
- When is software an electronically supplied service, and custom software not?
- When do you charge the VAT of your consumer's country?
- How do you pay foreign VAT through the OSS?
- Can a small IT business use the KOR or the EU-KOR?
Where do you pay VAT when you sell software or SaaS abroad?
That depends on two questions. Is your customer a business or a consumer? And are they in or outside the EU? A service to a business is taxed in the country where that business is established (Turnover Tax Act 1968, article 6(1)).
For VAT purposes, software you supply over the internet is a service, and so is SaaS. The EU implementing regulation lists the supply of digitised products, including software and updates, as an electronically supplied service (Implementing Regulation (EU) No 282/2011, article 7(2)). SaaS is software as a service: the customer uses your software online and usually pays a subscription.
For these rules a consumer is a customer without a VAT identification number (Belastingdienst, digital services). An organisation that is not a business but does have a VAT identification number is treated as a business (Belastingdienst, services to customers in other EU countries).
Software on a physical medium, such as a CD-ROM, falls outside the definition of an electronically supplied service (Implementing Regulation (EU) No 282/2011, article 7(3)). Other rules apply to such a supply. This article is about software over the internet and about SaaS.
How do you invoice software or SaaS to a business customer in the EU?
Without VAT, with the words VAT reverse charged on the invoice. Your customer calculates and pays the VAT itself in its own country. The Belastingdienst calls these intra-Community services, and says that you must always check the customer's VAT identification number (Belastingdienst, services to customers in other EU countries).
On the invoice you put VAT reverse charged and the customer's VAT identification number (Belastingdienst, invoice requirements for reverse charge). The law lists both as mandatory items (Turnover Tax Act 1968, article 35a(1), points d and m).
In your VAT return you enter the amount in box 3b, supplies to or services in countries within the EU. You also file the EC sales list (opgaaf ICP). That is a list of your EU business customers with their VAT number and the amount. The total of the EC sales list must equal box 3b for the same period (Belastingdienst, EC sales list).
You report the service in the period in which you supplied it. For services you may file the EC sales list monthly, quarterly or, with a permit, yearly (Belastingdienst, period of the EC sales list). If the service is exempt or taxed at 0% in the customer's country, it does not belong in the list (Belastingdienst, EC sales list).
How to fill in the VAT return and the EC sales list step by step is explained in the article Filing your VAT return: how, when and what to fill in.
What applies to a customer outside the EU?
Then you do not charge Dutch VAT. If you supply a service to a business outside the EU, and the service is taxed in that country, you do not need to include it in your VAT return (Belastingdienst, services to customers in non-EU countries).
You may still deduct the VAT on your own costs. Turnover that is taxed in a country outside the EU counts as taxable turnover (Belastingdienst, services to customers in non-EU countries). So you still get back the VAT on your laptop, hosting or office.
For a consumer outside the EU, too, the place of the service is where the customer lives. For electronically supplied services, such as SaaS and downloads, the law says so (Turnover Tax Act 1968, article 6h(1)). The same applies to licences, data processing and advice for a consumer outside the EU (Turnover Tax Act 1968, article 6i).
Whether the customer's country levies its own VAT or a similar tax is decided by the rules of that country. Dutch law only says that the service is not taxed in the Netherlands.
When is software an electronically supplied service, and custom software not?
An electronically supplied service is delivered over the internet or an electronic network, is largely automated with little human involvement, and cannot be provided without information technology (Implementing Regulation (EU) No 282/2011, article 7(1)). For consumers in the EU this distinction matters, because the € 10,000 threshold only applies to electronically supplied services.
The regulation gives examples. They include downloading or accessing software and updates, website hosting, automated online maintenance of programs, remote systems administration and online data storage (Implementing Regulation (EU) No 282/2011, annex I, points 1 and 2). The Belastingdienst also mentions access to or downloading of software and online data storage (Belastingdienst, digital services).
Advice that a professional gives by e-mail is not an electronically supplied service (Implementing Regulation (EU) No 282/2011, article 7(3)). Dutch law puts it the same way: the fact that you and your customer exchange messages over the internet does not in itself make a service electronic (Turnover Tax Act 1968, article 6h(2)).
Custom software that a programmer builds for one customer is mainly human work. Under that definition it is then not an electronically supplied service, not even if you deliver the code over the internet. For a business customer that makes no difference, because the normal rule for businesses applies. For a consumer in the EU it does: then the main rule applies that the service is taxed where you are established, and you charge Dutch VAT (Turnover Tax Act 1968, article 6(2)).
With a mix it is less clear, such as SaaS with a lot of implementation work or personal support. Then look at what the customer mainly buys, and record your choice. The Belastingdienst has the tool I supply services in and from abroad to determine which rules apply (Belastingdienst, services to consumers in the EU).
When do you charge the VAT of your consumer's country?
As soon as your turnover from digital services to consumers in other EU countries goes above € 10,000 in a calendar year. You count the amounts excluding VAT, and distance sales of goods to consumers in the EU count too (Belastingdienst, services to consumers in the EU). The threshold applies to the total of all EU countries together, not per country (Turnover Tax Act 1968, article 6k(1)).
Below the threshold you charge Dutch VAT, provided you also stayed at or below € 10,000 the year before. You report that turnover in box 1 of your normal VAT return. You may also opt for the VAT of the customer's country, but that choice applies for at least 2 years (Belastingdienst, services to consumers in the EU).
If you go over it during the year, you charge the VAT of the customer's country from that moment on (Turnover Tax Act 1968, article 6k(2)). You may only return to Dutch VAT once your turnover has been € 10,000 or less for a full calendar year, and then from 1 January of the following year (Belastingdienst, services to consumers in the EU).
An example. An app developer sells subscriptions to consumers in Belgium and Germany and stayed below € 10,000 last year. This year they earn € 3,000 in the first quarter, € 3,500 in the second and € 4,000 in the third, all excluding VAT. In the third quarter the total reaches € 10,500. From the moment the counter goes above € 10,000 they charge Belgian and German VAT, and next year from 1 January as well.
If you have a fixed establishment in another EU country, such as your own office, the € 10,000 threshold does not apply (Belastingdienst, services to consumers in the EU). If you also sell goods to consumers in other EU countries, also read when an online shop charges foreign VAT.
How do you pay foreign VAT through the OSS?
Through the Union scheme of the one-stop shop, also called OSS. With it you file one VAT return per quarter for all your services to consumers in the EU. You pay in one go, and the Belastingdienst passes the VAT on to the other countries (Belastingdienst, services to consumers in the EU).
You register in good time through Mijn Belastingdienst Zakelijk. You charge the customer the VAT of the EU country where the service is taxed, so that country's rate (Belastingdienst, services to consumers in the EU).
Within the Union scheme the Dutch invoicing rules apply. For VAT purposes you then do not need to send a consumer an invoice. VAT that you paid yourself in other EU countries cannot be reclaimed through the Union scheme (Belastingdienst, services to consumers in the EU).
The OSS is not compulsory. If you do not use it, you must register in every EU country where you owe VAT on services to consumers (Belastingdienst, services to consumers in the EU). For a small IT business with customers in a few countries the OSS is therefore usually less work.
Can a small IT business use the KOR or the EU-KOR?
Only if your turnover in the Netherlands is small. The small business scheme (KOR) is a VAT exemption for businesses with annual turnover in the Netherlands of no more than € 20,000 (Turnover Tax Act 1968, article 25a(1)). That limit applies to the year in which you register and the year before (Belastingdienst, KOR conditions). You then charge no VAT, but you also deduct no VAT (Turnover Tax Act 1968, article 25a(4)).
Services that are taxed in another country do not count towards the € 20,000 limit (Belastingdienst, KOR conditions). So that applies to reverse-charged services to business customers in the EU, and to digital services to consumers in the EU once you are above € 10,000.
With the EU-KOR you can also use the exemption in other EU countries. Your total turnover in the EU may then not exceed € 100,000 per calendar year, and each country's own limit applies in that country. You file a statement of your turnover in the whole EU every quarter (Belastingdienst, EU-KOR).
Such a threshold affects how businesses grow. Research on the VAT threshold in Finland found that entrepreneurs respond strongly to that threshold with their turnover. That response came mainly from the administrative burden of VAT, such as frequent filing and understanding the VAT system, not from the rate itself (Harju, Matikka & Rauhanen, 2019).
For an IT business with mainly business customers the KOR offers little. Your customers deduct the VAT anyway, while you no longer get back the VAT on your own laptop and software. Whether the KOR suits your situation is explained in the article on the small business scheme.
Sources
- Turnover Tax Act 1968 (Wet op de omzetbelasting 1968), articles 6, 6h, 6i, 6k, 25a, 35a and 37a, version in force from 1 January 2026. wetten.overheid.nl
- Council Implementing Regulation (EU) No 282/2011 of 15 March 2011, article 7 and annex I. eur-lex.europa.eu
- Belastingdienst, Calculating VAT on services to customers in other EU countries (in Dutch), accessed 31 October 2026. belastingdienst.nl
- Belastingdienst, Invoice requirements: you use the reverse charge scheme (in Dutch), accessed 31 October 2026. belastingdienst.nl
- Belastingdienst, EC sales list (opgaaf ICP, in Dutch), accessed 31 October 2026. belastingdienst.nl
- Belastingdienst, Period of the EC sales list (in Dutch), accessed 31 October 2026. belastingdienst.nl
- Belastingdienst, Filing a return when you supply services to customers in non-EU countries (in Dutch), accessed 31 October 2026. belastingdienst.nl
- Belastingdienst, Digital services (in Dutch), accessed 31 October 2026. belastingdienst.nl
- Belastingdienst, I supply services to consumers in the EU (in Dutch), accessed 31 October 2026. belastingdienst.nl
- Belastingdienst, Conditions of the small business scheme (in Dutch), accessed 31 October 2026. belastingdienst.nl
- Belastingdienst, Small business scheme in the European Union (EU-KOR, in Dutch), accessed 31 October 2026. belastingdienst.nl
- Harju, J., Matikka, T. & Rauhanen, T. (2019). Compliance costs vs. tax incentives: Why do entrepreneurs respond to size-based regulations? Journal of Public Economics, 173, 139-164. doi.org