The 0% VAT rate

The 0% VAT rate is applicable to supplies to ‘vessels used for navigation on the high seas’, used for industrial activities. According to the ECJ the wording ‘used for navigation’ means that an installation should at least mainly or for the most part be put into action for navigation on the sea. Since jackup drilling rigs are only predominantly in stationary position, the ECJ ruled that these jackup drilling rigs cannot be regarded as vessels for the application of the 0% VAT rate.

In the Dutch offshore energy practice the 0% VAT rate is currently applied in most cases. Often, the supplier holds a written statement of his recipient (usually the owner, operator or user of the rig) stating that it concerns a sea-going vessel used for industrial activities taking place mainly on high seas. 

What does this mean for you?

For the Dutch offshore energy market, the ECJ ruling will have large VAT compliance consequences. Following the judgment, owners, operators and users of offshore jackup drilling rigs will in future be confronted with (deductible) VAT on expenses relating to usage and maintenance of these rigs. For suppliers it is recommended to check whether and with respect to which supplies relating to such drilling rigs they will need to charge VAT.

We recommend to check what the consequences of this judgment will be for your business.


Please contact your primary contact person at Loyens & Loeff or one of our advisors of the Loyens & Loeff Energy Team or the Loyens & Loeff Indirect Tax Team for questions or advice.

If you have any questions regarding the draft bill or if you require assistance in drafting a reaction to the consulted draft bill, please do not hesitate to contact your trusted adviser or Bart Heijnen or Carolijne Koornstra-Sturm.

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