Dexport found out: new EU directives regarding VAT. Web shop owners supplying goods and services to consumers outside the Netherlands and within the European Union (EU) can expect major changes regarding VAT under new EU directives. There is no final legislation in the Netherlands yet, but it is expected.
When will you soon charge a foreign VAT rate?
Under the waiver regulations, you are currently required as an entrepreneur to file VAT returns if you sell above a certain threshold amount (per year, per country) to EU consumers outside the Netherlands. For Germany, for example, the threshold amount is 100,000 euros.
As of July 1, 2021, according to the new EU guidelines, a threshold amount of 10,000 euros (per year, but not per country so in total!) applies to all sales to European consumers outside the Netherlands. If this threshold amount is exceeded, then from that moment on VAT will be due in the EU country of the individual purchasing the goods or digital service. Each country still applies its own VAT rate. The threshold amount concerns the sum of the turnover of both goods and digital services to consumers.
The purpose of the new guidelines is that soon VAT will in principle be collected in and remitted to the countries where the products are purchased. Small online entrepreneurs will be spared this trouble because of the threshold amount. In practice, the intention is for Dutch entrepreneurs to declare their foreign VAT revenues to the Dutch tax authorities through a new one-stop shop system via the OSS (One-Stop-Shop) portal. It then distributes this to the relevant countries. However, at the time of writing it is not yet known when this system will go live.
What about VAT of dropshipment sales through platforms?
When a supplier/manufacturer is located outside the EU and a dropshipper imports these goods and supplies them to consumers, he can also use the OSS scheme as far as VAT returns are concerned. The basis for this is the platform fiction introduced, which ensures that dropshipment orders create both a transaction between the supplier and dropshipper (VAT entrepreneur) and a transaction between the dropshipper and the consumer. The platform fiction only applies to shipments of 150 euros or less and makes online platforms such as eBay, Zalando and Amazon directly responsible for VAT payments.
Big changes in the pipeline, then, for you as a crossborder e-commerce entrepreneur. Keep in close contact with your tax advisor for the latest news on this topic. If desired, Dexport can also put you in touch with an expert party.
