ACM: suppliers must be clear about the effects of the VAT reduction on energy

The Netherlands Authority for Consumers and Markets (ACM) has reminded energy suppliers that they must inform buyers in a proper, clear, and transparent manner about how they pass on to consumers the temporary VAT reduction on natural gas, electricity, and heat. The purpose of the temporary VAT reduction is to compensate consumers for the increased energy costs. ACM finds it important that consumers are able to see clearly what the effects are of this tax reduction.

Between 1 July 2022 and 31 December 2022, VAT on natural gas, electricity, and district heating will be temporarily reduced from 21% to 9%. The tax reduction applies to all components of the energy bill. Energy suppliers must explain clearly to their consumers how they will incorporate the VAT reduction during this period. To allow consumers to benefit from the tax reduction immediately, suppliers can, for example, temporarily adjust their monthly payments during this period.

Edwin van Houten, Director of ACM’s Consumer Department, explains: “The temporary VAT reduction has been introduced to provide partial relief to consumers for their high energy bills. It should therefore be clear to consumers what this VAT reduction means for their pocketbooks. Consumers thus need to see the VAT reduction very clearly, for example, in a reduction of their monthly payments.”

ACM also points out to suppliers that they should not use the VAT reduction for offering temporary rock-bottom deals. The VAT on natural gas, electricity, and district heating is 21%, and will, for now, be reduced for six months only. Since consumers are, generally speaking, customers with suppliers for more than six months, ACM calls on suppliers to continue using 21% when sending consumers offers for new energy contracts. This is also important because consumers must be able to compare offers from one supplier with those of other suppliers.

At all times, energy suppliers are required to inform consumers properly about their rates. In addition, suppliers must send easy-to-understand bills so that consumers know what they are paying for, and are also able to verify their bills. In that context, ACM, in a letter in April 2022, already reminded energy suppliers of the fact that they also need to be clear about the way in which they pass on the VAT reduction to their customers. 

See also

ACM ConsuWijzer: Tips on choosing an energy supplier (in Dutch)