With effect from 1 July 2021, the new VAT e-commerce package will enter into force. All entrepreneurs who supply goods intra-community to non-taxable persons (business-2-consumer) will be affected by the changes. In order to optimise your VAT position, proper preparation is required. The changes mainly affect distance sellers and platforms. In this article, we briefly explain the changes.
Do you supply goods to non-taxable persons within the EU and do you (indirectly) intervene in the transportation? Then you are considered a distance seller and will be affected by the changes. As a result, you must in principle charge the VAT of the EU country of arrival. You must then apply the VAT rate of that country and pay the VAT to that country.
This can be done through the One Stop Shop (OSS) system. This allows you to declare all your sales and pay the VAT on them in one periodic declaration in an Member State of your choice. The Dutch Tax Authorities already started with accepting registrations for the OSS-system. In order to use OSS, foreign registrations must be deregistered.
Small EU businesses are allowed to use the new EU-wide threshold of € 10,000 for distance sales in the EU.
VAT when selling via platforms
As of 1 July 2021, the VAT treatment of platforms will change drastically, provided that distance sales are facilitated. Facilitation is a very broad concept, as a result of which the fiction applies to virtually every intervention. Because of the new VAT rules, the facilitating platform will be regarded as the ‘deemed supplier’. The platform will then be liable to charge, declare and remit the VAT due. Although the physical delivery goes directly from the seller to the consumer, the VAT treatment is as follows:
The platform is considered a deemed supplier, if the sale is facilitated by the platform, and:
- the goods are transported from outside the EU and have an intrinsic value of less than €150; or
- the goods are not transported from outside the EU, but the supplier is located outside of the EU.
Only in these two situations, the platform is considered a deemed supplier and will be liable for the VAT remittance. Thus, platforms must anticipate on this with regard to invoicing, collecting VAT and their administration. Also, the supplier which is located outside the EU has an obligation to register for VAT purposes.
It is of great importance to anticipate to these changes timely. Have you thought about your accounting system, the VAT consequences of returns and the needed VAT registrations? For example, platforms have a retention period of 10 years and must keep extensive records.
Or do you supply or facilitate distance selling and do you have questions about your future VAT position? Feel free to contact us, we’ll be happy to assist you.