The VAT rules for professional education have been amended, effective from July 1, 2010. The amendment has will affect whether professional education is subject to VAT or not, and also the associated right to VAT deduction.
Background to the new VAT rules for education
A European Commission Regulation has been in force since October 1, 2006, that exempts professional education from VAT irrespective of how long the education or training takes (short courses or long-term training). The introduction of new rules was necessary in the Netherlands as it was still possible to choose to charge VAT on short professional education courses that were not statutorily regulated. The new rules mean that, in principle, VAT will be charged on professional education. The introduction of a system of recognition means, however, that educational institutions can continue to offer professional education that is VAT exempt. The customer’s VAT position determines whether it is more sensible to offer a VAT-exempt education or one on which VAT is charged.
Intrinsic amendments effective from July 1, 2010
The amendments to the VAT rules for professional education from July 1, 2010 mean that VAT will be charged on every education or training course that qualifies as professional education. The length of the education or training course is no longer relevant. If an educational institution wants to offer such courses exempt from VAT, the institution will have to be recognized by registering with the Short Professional Education Register (“SPER”). A request for recognition should be submitted through the Central Short Professional Education Register’s website: www.crkbo.nl.
Professional education provided by funded institutions as listed in the Annex to the Higher Education and Research Act (“HERA”), or in the Adult and Vocational Education Act (“AVEA”), is already VAT-exempt. Attaining recognition is, therefore, irrelevant for them.
Transitional rules have been introduced for professional education for contracts that were signed before July 1, 2010. These rules will remain in force until December 31, 2010, after which the new rules will apply in their full force to all professional education.
In addition to educational institutions, self-employed persons with no staff may also register with the SPER. This registration will mean that the teaching provided by self-employed persons and the teaching services provided to educational institutions by self-employed persons will be VAT exempt. In order to be able to register with the SPER, self-employed persons must meet the requirements of the self-employed persons’ quality code. These requirements are in line with the professional education quality code. The existing rules do not make it clear whether an individual self-employed person can offer educational services that are subject to VAT, in addition to the VAT exempt educational services. An official position from the Ministry of Finance will probably be issued later.