An installation company only reverse-charges VAT when it does physical work on a building as a subcontractor for another contractor or installer. If you work directly for a private client, an owners' association or a business that did not take on the work itself, you simply charge VAT. For plumbing and fitting a heat pump that is 21%. A mistake in either direction costs money, for you or for your client.
In short
- You only reverse-charge VAT as a subcontractor, or when you lend out staff, for physical work on buildings. You charge VAT to private clients and owners' associations.
- Plumbing, installation work and fitting a heat pump are subject to 21% VAT, also in a home older than 2 years.
- An invoice with reverse-charged VAT shows the words VAT reverse-charged and your client's VAT ID. If it shows VAT anyway, you owe that VAT and your client may not deduct it.
In this article
- When does an installation company reverse-charge VAT?
- Who is the main contractor and who is the subcontractor?
- Do you reverse-charge VAT for work for a private client or an owners' association?
- Which VAT rate applies to plumbing and a heat pump?
- What do you put on an invoice with reverse-charged VAT?
- What happens if you wrongly reverse-charge or wrongly charge VAT?
- How do you avoid mistakes with every new job?
When does an installation company reverse-charge VAT?
You reverse-charge VAT when you do physical work on immovable property as a subcontractor, such as a home or a commercial building. Reverse charging means you do not put VAT on your invoice, but your client reports the VAT in their own return. The Dutch Tax Administration lists work such as constructing, demolishing, installing, maintaining, repairing and cleaning (Belastingdienst). Installing pipework or maintaining a central heating system for a contractor therefore falls under it.
The same applies when you lend out fitters. If you lend staff to another business for this kind of work, you reverse-charge the VAT to the hirer (Belastingdienst). For a growing installation company that lends people to a fellow firm in busy weeks, this is a common situation.
There are two exceptions that matter to installers. If you do more than half of the work in your own workshop, you may not reverse-charge and you charge VAT (Belastingdienst). If, for example, you prefabricate most of a pipe system in your workshop, this exception may apply.
The second exception is work that is ancillary to the sale of a product. If you sell a product, the fitting costs are small and they are included in the price, you do not reverse-charge the VAT, not even on the fitting. The Tax Administration's example is about doors sold from stock and hung (Belastingdienst). For a boiler or heat pump that you supply and fit, the Tax Administration gives no example. How it works out depends on the ratio between the appliance and the fitting. If in doubt, have it checked beforehand.
The rule exists to make VAT collection more secure. The law allows VAT to be levied from the customer in designated cases, “in order to create more safeguards for its collection” (Article 12 Dutch VAT Act 1968). The Tax Administration then does not have to hope that every subcontractor actually pays over the VAT received.
Research in Germany shows how large the problem was that reverse charging is meant to solve. Germany extended reverse charging to construction work with subcontractors in 2004, citing fraud as the reason. After later extensions to sectors including scrap, cleaning and mobile phones, input tax refund claims in those sectors fell sharply. The researchers estimate the loss from fraud there before the change at about 5% of VAT revenue (Buettner & Tassi, 2023). That figure concerns German sectors in the years 2009 to 2018, not Dutch construction.
Who is the main contractor and who is the subcontractor?
The main contractor is the business that takes on the work from the client. The subcontractor does part of that work on behalf of the main contractor and reverse-charges the VAT to them (Belastingdienst). If the client is not a contractor themselves, the main contractor simply charges them VAT.
A chain can have more links. If installer B gets work from contractor A and B passes part of it on to C, then B is both A's subcontractor and C's main contractor (Belastingdienst). C reverse-charges to B and B reverse-charges to A. Whoever is in the middle of the chain reports the reverse-charged VAT and deducts it again in the same return.
If you hire a self-employed fitter yourself for a job you have taken on, you are the main contractor. The fitter then puts VAT reverse-charged on their invoice and you report that VAT in your own return. If they put VAT on the invoice anyway, you may not deduct it and you ask for a corrected invoice (Belastingdienst).
A self-builder also counts as a contractor. A self-builder is a business that carries out a building project without being commissioned by anyone else, as a normal part of its business. The Tax Administration gives the example of a housing association with its own maintenance staff that also contracts out work (Belastingdienst). If you work for such a client, you reverse-charge the VAT to them. So with a housing association or property developer, check whether it acts as a self-builder.
Do you reverse-charge VAT for work for a private client or an owners' association?
No. For work for a private client you always charge VAT. A private client is neither a contractor nor a self-builder, so there is nobody to reverse-charge the VAT to. If you reverse-charge anyway, the scheme has been applied wrongly and the Tax Administration can issue you an additional assessment for the VAT (Belastingdienst).
With an owners' association (VvE, the owners of an apartment building acting together) it works the same way. If you take on the work directly from the association, you are the main contractor and you charge VAT. The Tax Administration does not mention owners' associations separately. This follows from the division of roles: in subcontracting you reverse-charge to a main contractor or self-builder, and an owners' association is not one for an ordinary maintenance job (Belastingdienst).
It is different if a contractor has taken on the job from the association and contracts part of it out to you. Then you are their subcontractor and you reverse-charge the VAT to them. So do not look at who lives in the building, but at who took on the work.
The same applies to a shop, office or restaurant that hires you directly. A business that has not taken on the work itself as a contractor gets an invoice with VAT from you, even if it has a VAT number. A VAT number alone is therefore no reason to reverse-charge.
Which VAT rate applies to plumbing and a heat pump?
Plumbing, installation work and fitting a heat pump are subject to 21% VAT. For homes, the reduced rate of 9% only applies to insulating, painting, plastering and wallpapering in a home older than 2 years, and to cleaning. Other work on homes is taxed at 21% (Belastingdienst).
A heat pump saves energy, but that does not make fitting it insulation work. The rate depends on whether the type of work is on the list. If one project includes both insulation work and installation work, you split the quote and the invoice into a 21% part and a 9% part (Belastingdienst).
Shared areas in a building where several people live also count as a home (Belastingdienst). That matters for the 9% rate on, for example, insulation work in an apartment building. For pipework in those areas it changes nothing, because that stays at 21%.
Reverse charging does not change the rate. An invoice with reverse-charged VAT also states the consideration per rate, as it would apply without the reverse charge (Belastingdienst). Your client uses this to calculate the VAT they report themselves.
What do you put on an invoice with reverse-charged VAT?
On an invoice with reverse-charged VAT you put no VAT amount, but the words VAT reverse-charged. You also state your client's VAT identification number and the consideration per VAT rate (Belastingdienst). The VAT identification number (VAT ID) is the number a business uses to identify itself for VAT to its customers.
Your client's VAT ID is more than a formality. It is important evidence of who your customer is (Belastingdienst). Check a new client's number in VIES, for example, the European Commission's VAT number check. Keep the result with the job.
In your VAT return you enter the turnover on which you reverse-charged VAT in box 1e (Belastingdienst). You pay no VAT on it yourself. Your client reports the reverse-charged VAT in box 2a and deducts it as input tax in box 5b (Belastingdienst). For them the balance is usually zero.
A worked example. As a subcontractor you do pipework for €2,400. You invoice €2,400 with VAT reverse-charged. Your client reports €504 VAT in box 2a and deducts the same €504 in box 5b. Had you put €504 VAT on the invoice by mistake, you would owe that VAT and your client could not deduct it.
What happens if you wrongly reverse-charge or wrongly charge VAT?
A mistake in either direction costs money. If you reverse-charge the VAT when that was not allowed, for example with a private client or when it is not clear who the customer is, the Tax Administration can issue you an additional assessment for the VAT (Belastingdienst). An additional assessment means you still have to pay the VAT, even if you never received it from your client.
If you charge VAT when you should have reverse-charged, it also goes wrong. Anyone who states VAT on an invoice that they would not otherwise owe still owes that VAT (Article 37 Dutch VAT Act 1968). So you have to report and pay it. Your client may not deduct that VAT and asks you for a corrected invoice (Belastingdienst).
| Mistake | Consequence |
|---|---|
| Reverse-charged to a private client or owners' association | The Tax Administration can issue you an additional VAT assessment. |
| Reverse-charged without an identified customer | The Tax Administration can issue you an additional VAT assessment. |
| VAT charged when reverse charge applied | You owe the VAT. Your client may not deduct it and asks for a new invoice. |
If you discover a mistake yourself, correct it quickly. If it is no more than €1,000, you include the amount in your next VAT return. If it is more, you are required to correct it as soon as possible with the Supplementary VAT return form, in any case within 8 weeks of discovering the mistake (Belastingdienst).
If the Tax Administration discovers the mistake first, even within those 8 weeks, you may get a penalty. If you reported too little VAT and correct it too late or not at all, an offence penalty may follow (Belastingdienst). An offence penalty is a penalty for a mistake you can be blamed for, such as gross negligence or intent. You can submit corrections up to and including 5 years after the year the correction relates to.
How do you avoid mistakes with every new job?
Ask five questions with every new job before you make the quote. Then the VAT is right on the quote, on the invoice and in the return.
Who took on the work?
If that is your client, as a contractor, installer or self-builder, you reverse-charge. If your client is a private client, an owners' association or a business that did not take on the work, you charge VAT.
Is it physical work on a building?
Installation, maintenance and repair are included. Design work, security and rental are not (Belastingdienst).
Where is most of the work done?
More than half in your own workshop means charging VAT.
Are you mainly selling an appliance?
If the fitting is minor and included in the price, you charge VAT on the whole.
Have you checked your client's VAT ID?
If it is not clear who the customer is, the Tax Administration can issue you an additional VAT assessment.
Record the outcome in the quote and in your records. Then whoever makes the invoice later also knows which rule applies.
Sources
- Belastingdienst (Dutch Tax Administration). Reverse charge for subcontracting and lending staff. Consulted 16 October 2026. belastingdienst.nl
- Belastingdienst. Roles in subcontracting and lending staff. Consulted 16 October 2026. belastingdienst.nl
- Belastingdienst. Exceptions for subcontracting and lending staff. Consulted 16 October 2026. belastingdienst.nl
- Dutch VAT Act 1968 (Wet op de omzetbelasting 1968), Article 12, in force from 1 January 2026. Consulted 16 October 2026. wetten.overheid.nl
- Buettner, T. & Tassi, A. (2023). VAT fraud and reverse charge: empirical evidence from VAT return data. International Tax and Public Finance, 30(3), 849-878. doi.org
- Belastingdienst. How does reverse charging VAT work? Consulted 16 October 2026. belastingdienst.nl
- Belastingdienst. Work on homes (9% VAT). Consulted 16 October 2026. belastingdienst.nl
- Belastingdienst. Homes older than 2 years. Consulted 16 October 2026. belastingdienst.nl
- European Commission. VIES, VAT number validation. Consulted 16 October 2026. ec.europa.eu
- Belastingdienst. Deducting reverse-charged VAT. Consulted 16 October 2026. belastingdienst.nl
- Dutch VAT Act 1968 (Wet op de omzetbelasting 1968), Article 37, in force from 1 January 2026. Consulted 16 October 2026. wetten.overheid.nl
- Belastingdienst. Correcting a VAT return. Consulted 16 October 2026. belastingdienst.nl