New VAT rules for international e-commerce

22 October 2021
Article

As of July 1, 2021, new VAT rules apply to entrepreneurs which sell (online) goods to consumers (B2C) in other European countries. It does not matter whether the goods originate within or outside the European Union. We summarize the most important consequences for Dutch entrepreneurs.

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Written by:
Anne Kin Tax advisor
international e-commerce

What is the purpose of the new VAT rules?

The aim of the new VAT rules is to create an equal playing field between suppliers operating from the European Union (EU) and those from outside the EU. In addition, with these new rules the EU wants to make the enforcement and collection of VAT easier.

Special rules apply to entrepreneurs who trade via an online platform, such as Amazon, eBay, Marktplaats, Facebook and bol.com. We will return to these situations in more detail in a subsequent article.

New VAT rules on e-commerce

The new VAT rules for e-commerce apply to all distance sales. Distance sales are supplies of goods to individuals in other EU member states where the supplier is involved in the transport of the goods. As of July 1, 2021, there are no threshold amounts for distance sales. With the exception of small entrepreneurs, whose turnover is less than €10,000 per year, any distance sale is subject to VAT in the consumer's Member State. The transport requirement has also been broadened. Since July 1, 2021, the transport requirement is already met if the supplier has a direct or indirect role in the transport. Only if the supplier has no involvement in the transport in any way do the rules not apply. In that case, the regular rules for supplies of goods apply and VAT is due in the Member State of departure or dispatch of the goods.

Additional rules apply to entrepreneurs who import goods from non-EU countries. The import of goods and the supply of goods are two separate matters for VAT purposes. The levying of import VAT takes place in the Member State where the goods are released for free circulation. An import VAT exemption existed until July 1, 2021 for goods with a value of up to € 22. This import VAT exemption has been completely eliminated since July 1, 2021. Are goods imported from outside the EU and supplied to consumers within the EU? If so, the rules are more complex and further analysis is required.

Centralized declaration portal

Since July 1, 2021, there is a centralized declaration portal that you, as a business owner, can use. You must apply for this. With the centralized declaration portal, the so-called 'One Stop Shop System' (OSS), a Dutch company must file VAT returns in all other countries via a Dutch declaration portal. It is not compulsory to use the OSS system. You can also choose to file your returns in all countries in the normal way. Please note, however, that it is not possible to reclaim VAT through the OSS portal. In addition, you must comply with more stringent administrative requirements when using the new rules and you have an administrative retention obligation of ten years.

New rules for entrepreneurs importing goods from non-EU countries

New rules apply to entrepreneurs who import goods from non-EU countries. There is an amended import exemption for goods with an intrinsic value of up to € 150. The exemption only applies to custom duties. In other words, under the new rules import VAT is always due, but not always customs duties, because the exemption applies to an amount of € 150. For the use of this import exemption, you will need a separate VAT number that you must provide to customs. In these cases too, there is a special declaration portal to apply to: the 'Import-One Stop Shop' system (I-OSS). If not met the conditions of this system,  the import VAT is due in the Member State where the goods are released for free circulation. If the goods are imported in the name of the consumer, then, as under the current rules, no VAT will be due on the supply. In certain cases an import system can be used whereby postal and courier companies collect the import VAT due from the consumer.

Deliveries to foreign entrepreneurs participating in the small business scheme (KOR)

The new e-commerce rules for distance selling also apply to supplies to foreign entrepreneurs who participate in the small business scheme (KOR) in their country of origin. They only perform exempted services and are treated the same as private persons for VAT purposes. Therefore, when calculating whether you have supplied foreign private persons for more than € 10,000 in total, deliveries to these entrepreneurs are also included.

Do you structurally supply a lot to a single foreign KOR entrepreneur? If so, you must also take into account the turnover threshold for intra-Community acquisitions (ICV) applicable in that country. The turnover thresholds for ICV differ per EU country. As soon as the turnover threshold for ICV is exceeded, the distance selling arrangement no longer applies. In that case, there is an intra-Community supply in the Netherlands - which is taxed at 0% subject to conditions - and an intra-Community acquisition in the country of destination of the goods.

Changes for (actions through) platforms

For entrepreneurs who trade through a platform, or manage a platform themselves, the new e-commerce rules have specific implications.

Review the most important VAT changes in the international arena.

Learn more

Do you have questions about the new VAT rules for international e-commerce? Please contact Anne Kin, tax advisor, at telephone number +31135915125 or send Anne an e-mail.

View all the changes to VAT from the 2022 Tax Plan.

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