How contractors are paid

The rule

The agreed rate is the gross amount, VAT included. VAT is backed out of it. It is never added on top.

If we agree 500 euro, the contractor receives 500 euro in total and the VAT is inside that number.

The calculation

vat = gross * rate / (100 + rate)
net = gross - vat

At the standard Dutch rate of 21 percent, on a gross of 500 euro:

vat = 500 * 21 / 121 = 86.78
net = 500 - 86.78    = 413.22

When the contractor is VAT exempt

A contractor using the kleineondernemersregeling charges no VAT. They receive the full agreed amount, and the invoice carries the Dutch exemption wording rather than a VAT line.

No VAT is backed out. The gross is the net.

Why it is written this way round

Agreeing a number and then adding VAT to it means the person hears one figure and the company pays another, and the disagreement surfaces at invoice time when it is awkward. Quoting gross means the number said out loud is the number that moves.

Self-billing

erudeon issues the invoice on the contractor's behalf rather than waiting for one. This is the deciding requirement behind company/decisions/0001-leaving-zoho-books-for-jortt.md and is not yet live.

Until it is, contractors invoice us and the figures above still apply.