Product or service: when does it matter?
For each invoice line in PERIFACT, you can check the box “On duty” check this box. This lets PERIFACT know whether you are delivering a tangible product or providing a service. That distinction matters for invoices to companies in other EU countriesit determines how the VAT is processed and where the turnover ends up in your tax return.
Do you only invoice clients in your own country? Then this box has no effect on your VAT and it doesn't matter whether you check it. You can even hide it completely, see point 5.
1. The rule of thumb: can you grab it?
You don't need to be a VAT expert for this. In the vast majority of cases, a single question will get you the answer:
- Can you grab it and send it? Then it is a delivery, or a good. Leave the “Is service” box unchecked.
- Are you providing knowledge, time, access, or a license? Then it is a service. Check “Is service”.
So a laptop that you send is a delivery. The hour you spend installing that laptop is a service. If they are both on the same invoice, you only check the box for the line with that installation hour.
2. The difference in a single overview
| Feature | Delivery (good) | Service |
|---|---|---|
| What it is | A tangible product that goes from you to the customer | Knowledge, time, licenses, or access, so nothing tangible |
| Examples | Laptops, cameras, tools, printwork, materials | Software, web design, hosting, advice, photography, downloads |
| “Is service” box” | Let yourself out | Are you checking off |
| Does it have to cross the border? | Yes, the goods are physically moving to the other EU country | No, that requirement only applies to goods |
| VAT for a valid EU VAT number | 0% on the invoice; the VAT has been shifted to the customer | 0% on the invoice; the VAT has been shifted to the customer |
| Dutch VAT return | Section 3b, on the ICP return as a supply | Category 3b, on the ICP return as a service |
| VAT return Belgium | Rooster 46 | Rooster 44 |
3. Real-world examples
These are goods, so a delivery
- Laptops, servers and computer parts
- Cameras, lenses and accessories
- Tools
- Flyers, printed matter and books
- Materials and parts that you send
- In short: everything that is bought, delivered, and becomes the property of the customer
These are services
- Software licenses and SaaS subscriptions.
- Development and programming work
- Web design, hosting and support
- Photography
- Coaching, advice and training
- Online services and digital downloads
- Rights, workshops and consultancy
- Maintenance and remote support
Borderline case? Look at what the customer ultimately receives. If you email a design as a file, it is a service. If you send that same design printed out, it is a supply. If you really can't figure it out, present the case to your accountant.
4. What does PERIFACT do with the checkmark?
PERIFACT uses the checkmark per invoice line to put your international turnover in the correct category.
- Check box: the rule is a ICP service. In the Netherlands, the turnover goes in section 3b of the VAT return and it is listed as a service on the EC sales list. In Belgium, it goes in box 44.
- Check out: the rule is a ICP delivery. In the Netherlands, the turnover also goes into section 3b, but on the EC sales list it is reported as a supply. In Belgium, it goes into grid 46.
Pay attention to goods: The 0% rate only applies if the goods actually go to the other EU country. Therefore, keep your shipping and transport documents. This requirement does not apply to services; they do not need to cross the border.
5. Don't you see the box?
You can make the “Is service” box visible or invisible yourself:
- From the main menu, go to SETTINGS and then to BASIS.
- Open the tab [Presentation].
- Zet Always show ‘Is service’ on invoice line on or off.
Do you only invoice within the Netherlands? Then you can safely turn the box off so it doesn't get in the way during entry. Do you also invoice companies in other EU countries? Then turn it on so you can check per line whether it is correct.
6. Why this is important
The difference between a supply of goods and a service determines:
- whether your EU invoice is an ICP supply or an ICP service;
- how the turnover ends up on the ICP return;
- in which section or box the turnover goes in the VAT return;
- which VAT rate applies;
- whether the VAT should be reverse-charged to your customer.
As long as you indicate per line whether it is a service or a supply, PERIFACT ensures that this is handled correctly automatically.
Are you stuck?
Feel free to ask your question via the contact page. We are happy to think along with you.