06 February 2019

The applicable VAT rate on transport costs: 6% or 21%?

If, as a supplier, you deliver goods or provide services, you must charge VAT on the total amount payable. In practice additional costs are sometimes charged together with the price of the delivered goods or services, such as transport costs. This raises the question, when should you charge 6% and when should you charge 21%?

These transport costs are included in the taxable amount if they are charged by the supplier or service-provider, regardless of whether this is done by means of a separate debit document or even under a separate agreement (Article 26 (2) of the VAT Code).

The VAT rate applicable to the charged transport cost depends on the VAT rate that must be charged on the delivered goods or service. If goods (where several types of goods are delivered) or services are all subject to the same VAT rate, the answer is simple: the transport costs are subject to that rate.

However, if the transport costs relate to several types of goods and/or services which are subject to different VAT rates, they must be allocated in proportion to the price of the goods in each VAT rate category.

As such an allocation is cumbersome, the Administration accepts the uniform taxation of transport costs  at the lowest rate applicable to the invoiced goods. Such an approach may only be applied if the supplier delivers the goods charged at the lowest rate at the same time as the other goods.

Suppose a drinks merchant supplies water and beer to a customer; the supply of water will be subject to the reduced VAT rate of 6% while the supply of beer will be subject to the standard VAT rate of 21%. The merchant also charges transportation costs. These transport costs may be invoiced with 6% VAT on condition that the water and the beer (with the different rates) are delivered to the customer at the same time. 

Tax

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