Including or excluding VAT? Why you'd better mention it

Always clearly state the price including VAT to consumers as a single total amount. A sales price to consumers must be displayed including VAT and all unavoidable additional costs. Failure to do so may constitute a misleading trade practice. This applies even if it is stated in your general terms and conditions : the main price itself must be correct. The consequence could be that a consumer does not have to pay the VAT on top of the agreed price, and in some cases, the Authority for Consumers and Markets (ACM) may take action. For entrepreneurs supplying consumers, a clear price indication is therefore not a minor detail, but a legal risk that is best covered.

Including or excluding VAT: what should you mention?

If you supply to consumers, you must in principle display the price including VAT. A consumer must be able to see at a glance what they will ultimately pay, including all unavoidable costs. If you only state an amount excluding VAT or omit the VAT altogether, the final price may turn out to be unexpectedly higher. It is precisely this unexpected increase that the legislator and the regulator consider problematic.

For business customers, the situation is different. Entrepreneurs generally charge amounts excluding VAT, because they can reclaim the VAT. The key point: your pricing must align with your target audience and should not cause confusion about what actually needs to be paid. If you want to delve deeper into the rules, also read our explanation on how to list prices when selling to consumers.

Why this doesn't only affect webshops

Many entrepreneurs believe that pricing regulations only apply to webshops or retail. That is incorrect. The obligation to be clear about pricing applies to virtually every entrepreneur who supplies goods or services to consumers: from service providers and consultants to real estate agents, contractors, and freelancers. If you work with commission, an hourly rate, or a customized quote, it must also be clear whether VAT is added on top.

What is a misleading trade practice?

A misleading commercial practice is a situation in which a trader provides incorrect or incomplete information, causing the consumer to make a decision they would not otherwise have made. Examples include quoting a price different from the actual one, concealing additional costs, or providing misleading product information. Comparative advertising that creates confusion regarding brands or trade names may also fall under this category.

The price including VAT is considered essential information that a consumer needs to make an informed choice. If this information is missing or unclear, it can easily be deemed misleading.

Important to know: the burden of proof lies largely with the trader. In the event of a dispute, you as an entrepreneur must be able to demonstrate that the information you provided was accurate and complete. This puts consumers in a relatively strong position. Incidentally, do not confuse a misleading commercial practice with an aggressive commercial practice: the latter concerns undue influence or coercion, whereas deception involves inaccurate or missing information.

Unclear VAT as a practical example

That ambiguity regarding VAT can concretely result in deception is evident from a ruling by the Amsterdam District Court (ECLI:NL:RBAMS:2019:7486). A consumer had engaged a rental agent who charged a commission of 8% of the rental price for the first year, with a minimum of eight hundred euros. This commission was agreed upon in the brokerage agreement, but only the general terms and conditions stated that it concerned an amount exclusive of 21% VAT. The consumer subsequently disputed the validity.

The judge ruled that this constituted a misleading commercial practice: the VAT was not sufficiently clearly incorporated into the price. The general terms and conditions offered no remedy, as the main agreement regarding the price itself remained unclear. The judge considered full annulment to be going too far; only the provisions regarding VAT were annulled. The result: the consumer did not have to pay the VAT on top of the commission.

What are the sanctions and consequences?

The consequences of a misleading trade practice can play out on two levels: civil law between you and the consumer, and administrative law via the supervisory authority.

• Annulment of the agreement. The court may annul an agreement in whole or in part. In the case above, the annulment was limited to only the VAT provisions, because the ambiguity concerned only the VAT. However, the consequence was that the consumer did not have to pay the VAT.
• Compensation. In addition to annulment, a consumer may, under certain circumstances, also claim compensation if he has suffered loss as a result of the deception.
• Action by the ACM. The Unfair Trade Practices Act grants the ACM the authority to intervene, for example by means of a penalty payment order or a fine. The ACM can take enforcement action against the failure to disclose unavoidable additional costs, which result in an unexpectedly higher total price. Fines can be substantial, and for larger enterprises, a percentage of turnover may serve as the benchmark. The exact amount depends on the circumstances and the size of the enterprise.

You can, of course, defend yourself against a fine decision, but that is a process you would rather avoid. It is cheaper and wiser to have the price listing in order beforehand.

This is how you avoid problems with your price listing

With a few concrete steps, you significantly reduce the risk:

1. State the price including VAT as the final amount to consumers , and make the breakdown visible if desired.
2. Ensure the price and VAT status appear where the agreement is formed: in the quotation, the contract, or on the order page, not just hidden in the general terms and conditions.
3. Be explicit about all unavoidable additional costs, such as administration, shipping, or file fees.
4. Tailor your communication to your target audience: include VAT for consumers; for business clients, you can work with VAT exclusive, provided this is clearly stated.
5. Have your most important documents legally reviewed periodically so that the quotation, agreement, and general terms and conditions align.

Are you unsure whether your current documents are consistent? Through legal assistance for entrepreneurs a critical look at them and assess your agreements from the perspective of contract law.

Frequently asked questions about inclusive or exclusive of VAT

As a business owner, should I state prices including or excluding VAT?

When dealing with consumers, you should in principle state the price including VAT, so that it is clear what they ultimately pay. In business transactions between entrepreneurs, amounts excluding VAT are often used, because entrepreneurs can reclaim the VAT. In both cases, make it clear which amount you are stating.

Is it sufficient to mention VAT only in the general terms and conditions?

No. If the price agreement itself is unclear regarding VAT, the general terms and conditions offer no salvation. The court may still rule that a misleading commercial practice has taken place, with the consequence that the consumer may not have to pay the VAT.

What happens if I don't clearly state the VAT?

Under civil law, the court can annul the agreement in whole or in part, which may mean you cannot pass on the VAT to the consumer. In addition, the ACM can take enforcement action by issuing a penalty payment order or a fine. The risk depends on the circumstances of the case.

Am I allowed to display prices excluding VAT to business customers?

Yes. In business-to-business (B2B) transactions, it is customary and permitted to quote amounts excluding VAT, as entrepreneurs can usually reclaim the VAT. However, explicitly state that the amount is exclusive of VAT to avoid any misunderstanding regarding the total price.

Does a quotation or hourly rate have to include VAT?

If your quotation or hourly rate is aimed at a consumer, it must clearly state the total amount including VAT that they will pay. If you work for business clients, you may quote excluding VAT, provided you state this explicitly. Therefore, include the VAT status on the quotation itself, and not just in the attached terms and conditions.

Does this also apply to self-employed professionals and service providers?

Yes. The obligation to be clear about the price applies to virtually every entrepreneur who supplies goods or services to consumers, so this also applies to freelancers, consultants, real estate agents, and other service providers who work with quotations or hourly rates.

Have your documents checked by MKB Juristen

An unclear VAT statement may seem like a detail, but it can have major consequences: a consumer who does not have to pay VAT, a voided agreement, and in the worst-case scenario, a fine from the ACM. Your general terms and conditions alone are not enough; your quotations and agreements must also be correct.

Therefore, do not just have your general terms and conditions checked, but provide us with the complete picture. This is especially important if you do business with consumers. This way, we ensure legally sound documents that you can rely on. Would you like to have this checked? Schedule a no-obligation intake and we will look at your situation together.