Business Partners - Why Is VAT Charged on Transactions with Pay. ?

VAT on PSP Services

The services of a PSP (Payment Service Provider) such as Pay. generally do not qualify for the VAT exemption that applies to payment transactions provided by traditional banks. As a result, PSPs typically charge 21% VAT on their transaction and service fees (or apply the reverse charge mechanism where applicable).

Why Banks Are Exempt and PSPs Are Not

Banks:
Activities relating to payment accounts, savings accounts, and direct money transfers are legally exempt from VAT. For this reason, banks do not charge VAT on their standard account or transaction fees.

PSPs:
PSPs often provide technical processing services, software, and payment infrastructure. According to European and Dutch case law (including the well-known Bookit and DPAS judgments), these services are considered technical and operational in nature. They do not constitute exempt banking services and are therefore subject to VAT.

What Does This Mean in Practice?

Dutch PSPs:
Companies such as Pay. charge 21% VAT on transaction and service fees.

Foreign PSPs:
Many PSPs operate from another EU member state (for example, Ireland). If you provide a valid Dutch VAT number, VAT is often reverse charged and will not appear on the invoice.

Accounting:
VAT charged by a Dutch PSP can generally be reclaimed as input VAT in your VAT return, subject to the normal deduction rules.