Netherlands: Certain sunscreen, toothpaste are eligible for reduced VAT rate

Netherlands: Sunscreen, toothpaste eligible for VAT

The Dutch Supreme Court (Hoge Raad) on 11 November 2016 held that sunscreen with UVA and UVB filters and toothpaste containing fluoride are pharmaceuticals for purposes of the value added tax (VAT). As such, these products are eligible for the reduced VAT rate of 6% (and not subject to the general VAT rate of 21%).

Related content

To be eligible for the reduced VAT rate, pharmaceuticals do not necessarily have to be medicines, as defined under the Dutch Act on Medicines (Geneesmiddelenwet). 

According to the Dutch Supreme Court, products serving healthcare purposes can be defined as pharmaceuticals when their therapeutic function is explicitly shown or when they are presented in such a manner that the average consumer assumes that the product has this function. 

  • For sunscreen, the presented therapeutic function covers the protection of skin from sunburn by means of the UVA and UVB filters. 
  • For toothpaste, this function entails protection from dental caries through the use of constituents like sodium fluoride.

KPMG observation

The decision by the Dutch Supreme Court has opened ways for imposing the reduced VAT rate of 6% on other products that serve healthcare purposes. 

 

Read a November 2016 report prepared by the KPMG member firm in the Netherlands: Sunscreen and toothpaste: 6% VAT

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.