Time for a BTW Favourite! Every quarter (when it’s time to file your BTW return) we get this question in:
Is the BTW/ VAT on my Facebook Ads invoice deductible?
In short: YES! – BUT. When you have set up your advertisement profile correctly at Facebook the BTW/VAT is deductible. You won’t really see it though as it’s all about administration formalities here instead of paying money first and then claiming it back.
Here’s how it goes:
When you register as a business (you will need to give your BTW/VAT number to Facebook) you will fall under the EU ruling that states that services between 2 businesses between the EU are taxed in the country of the customer (this would be you).
Facebook is registered in Ireland (as you can see on your invoice), you are registered in the Netherlands.
This means that no BTW/VAT will be charged on the invoices that you receive, as it falls under the Dutch BTW system. The BTW/VAT is reversed.
You can actually find this term ‘VAT reversed’ in the terms and conditions at Facebook – sometimes it is stated on your invoice (as it should be).
In your quarterly BTW return you will note it as following:
Section 4b, left box: the net amount that you find on your FB invoice
Section 4b, right box: 21% over this amount. A.k.a. the Dutch BTW tariff that should be charged since the VAT is reversed.
You have now reversed the VAT. When your activities are eligible to deduct BTW you will need to add the amount in the right box (the 21% BTW that you have just calculated) as a deduction in section 5b.
Voila! You have now charged yourself with 21% BTW over the invoice, and have deducted it as well. The amount to pay/receive will be 0 Euro for this invoice.
Please note that this is a mandatory ruling for BTW, indeed quite some extra work for nothing to pay/receive but if you skip t you will receive penalties.
PS: Got questions about your BTW return, or would you like to go through the return together? Let’s connect! firstname.lastname@example.org