Why do I pay tax twice on tap water?

You pay 2 types of tax on your tap water:

• Tap water tax: This is an environmental tax. It is designed by the government to encourage households to use less tap water. The less water you use, the less tax you pay. The government determines the tax rate each year.
• VAT (value added tax): You pay 9% VAT (value added tax) on your tap water. This is a turnover tax charged on the supply of goods or services.

Tap water tax is included in your water bill. VAT (value added tax) is then calculated on the total amount, including tap water tax. This means you also pay VAT (value added tax) on the tap water tax itself. It is a tax on a tax. These rules and regulations are set by the government. All water companies in the Netherlands must pass these taxes on to their customers.