Horse auctions have become an integral part of today’s world. Every week hundreds of horses, foals and embryos are sold at auctions. One of the things you have to deal with when buying at an auction is VAT. How does that work exactly? Below you will find answers to the questions most frequently asked by potential buyers.
What are the rules for VAT rates at auctions?
In the Dutch horse sector several different VAT rates apply. There are VAT rates of 21% , but also of 9% or 0% (*). When a private person sells a horse, no VAT is due. The information below assumes that the selling party is an entrepreneur:
- In principle, a VAT rate of 21% is due on the sale of sport and recreational horses sold at an auction.
- For embryos, sperm, broodmares and surrogate mares the VAT rate is 9% in general.
- For foals the VAT rate is, in principle, 21%, but sometimes it can be 9%, provided that these foals will later be used for breeding.
- When you buy a stallion that can also be used for sport or recreation, VAT can consist for 75% of 9% and for 25% it is 21%. When you buy a stallion that will only be used for breeding, the VAT rate is 9%.
- Check per auction lot if VAT is due and if so, how much.
Do I, as a resident of Europe, have to pay VAT?
- If you are a private person, you have to pay VAT.
- If you are a (VAT) entrepreneur within the EU member states, it is possible to apply a VAT rate of 0%. This has to do with, amongst other things, the free traffic of goods within the European Union. One will, however, have to prove, for example with a consignment note, that a horse is actually to be transported to another EU member state.
If I do not live in the EU, do I not have to pay any VAT?
Correct! When you are living outside the EU the zero-rate applies, provided that the horse leaves the EU within 90 days. The selling party has to be able to show that the horse has actually left the EU. This can be done with the so-called ‘confirmation of export’. If the horse stays more than 90 days in Europe, for example for rearing or training, VAT has to be paid if the selling party is liable to VAT. As soon as the horse is concretely exported, the buying party can ask for a VAT refund, submitting the export documents.
Our advice to buyers and sellers at auctions:
Read the auction conditions thoroughly. Auctions can apply different conditions that affect you as buyer or seller. In addition, we recommend that you contact a tax consultant for questions such as VAT.
*This article states the VAT percentages that apply in the Netherlands.
Authors: Lynn Wossink & Wendy Scholten