As from 2021, foreign VAT on distance sales
The VAT rules for distance sales are changing as from 2021. The various threshold amounts per Member State will disappear. The distance sales scheme applies if your company sells goods to private individuals (or legal entities without VAT number) in another Member State. This means that you must pay VAT in one or more Member States and therefore must request a foreign VAT number. The (expansion of the) one-stop shopping arrangement offers you a way to pay foreign VAT via the Dutch Tax and Customs Administration and thus reduce your administrative burden and costs.
What is the distance selling scheme?
The distance selling scheme applies if your company sells goods to private individuals residing/established in other Member States, where the goods are transported or shipped by you or at your expense. For distance selling to private individuals in the Netherlands (by foreign EU entrepreneurs), there is currently still a threshold amount of €100,000. Above €100,000, that EU entrepreneur owes VAT to the Netherlands. Upon exceeding the threshold amount, the EU entrepreneur must register for VAT in the Netherlands. Vice versa, a threshold amount of €35,000 applies for Belgium. Upon exceeding this threshold, your company must register in Belgium and pay Belgian VAT.
As from 2021, no more threshold amounts
The threshold amounts per Member State will disappear as from 2021. In the case of distance selling, you can elect to request a VAT number in each Member State in order to pay the foreign VAT for distance sales. At the same time, a one-stop shopping scheme will be in effect as from 2021, in which VAT declaration will only have to be done in one country – the Member State where the seller is established. By way of the one-stop shopping scheme, the entrepreneur can pay the foreign VAT via his or her own Member State. The Dutch Tax and Customs Administration will ensure further distribution of the VAT. This scheme can be interesting for you because a foreign VAT registration in one or more Member States can be dispensed with.
Simplification for small entrepreneurs
Small entrepreneurs who deliver/issue less than €10,000 in distance sales and digital services to private individuals may continue to calculate the national VAT over their distance sales. They can also elect to apply distance sales scheme and thus pay foreign VAT via the one-stop shopping scheme (OSS return).
What consequences does the new scheme have for you?
Submitting a VAT return and the payment of foreign VAT will be simplified. Moreover, your business does not have to register in each Member State in which you deliver to private individuals under the distance sales scheme. Via this OSS return, however, you cannot deduct foreign VAT. To do so, as from 2021 you must still submit a request for a refund to the Tax and Customs Administration of that Member State or request a foreign VAT number there.