New e-commerce VAT guidelines 2021: this is a must
As of July 1, 2021, things will change for online retailers. The VAT system for cross-border deliveries to other countries within the EU will be different. The levying and collection of VAT is made simpler and more modern with these new directives. In this blog article you can read more about the changes that are important for online retailers.
The current situation
When as a Dutch webshop you deliver goods to private individuals in another EU country, the deliveries are taxed at 9 percent or 21 percent based on current guidelines. Dutch VAT.
If you, as a webshop, have achieved a certain turnover in one year from deliveries to other EU countries, you must deduct the VAT in the country of delivery. Currently, different turnover thresholds are used by different countries. In Germany and the Netherlands, this threshold is € 100.000, in Belgium a lot lower, namely € 35.000.
In such cases, online retailers must apply for a VAT number from the relevant country and submit their VAT returns to the local tax authorities at fixed times.
The situation from 1 July: what exactly is going to change?
The most important change is the removal of the turnover thresholds. The main rule is that from then on, deliveries of e-commerce shipments to private individuals are always taxed with the VAT of the country of arrival.
These new guidelines apply to online retailers with a turnover of more than € 10.000. A small side note is that this € 10.000 is generated by sales to consumers in other EU countries (so not including the Netherlands). If this turnover is less than € 10.000 per year, Dutch VAT may be invoiced. This threshold amount does not apply to the delivery of excise goods. The VAT exemption will also expire on shipments up to € 22.
The new guidelines give online retailers the option to pay foreign VAT to the Dutch tax authorities. The latter will pay those amounts to the tax authorities of the country concerned. A separate VAT return must be submitted for this via the OSS scheme.
What is the One-Stop-Shop Scheme?
The OSS scheme means that as a webshop you only have to submit one VAT return for all cross-border e-commerce sales. And that at the Dutch Tax Authorities. The tax authorities will then pay the VAT to the member states where the VAT must be paid.
Foreign VAT cannot be reclaimed via the OSS scheme. You can only reclaim this via a separate refund request. You submit this via the portal of the Tax and Customs Administration.
Non-EU shipments: what about that?
The new guidelines can also apply to goods that have yet to be imported from non-EU countries. In this scenario you are dealing with two taxable facts: the import and the delivery of the good. Online retailers can make use of the so-called I-OSS scheme (Import-One-Stop-Shop) when the goods have a value greater than or equal to € 150. These goods are exempt from import duties.
Online retailers must submit the VAT declaration for the imported goods in the Member State of establishment and the non-EU supplier must submit this declaration in a Member State of his choice. The tax authorities will then pay the VAT in the Member States where the VAT should have been paid. As an online retailer you will receive a special VAT number. With this VAT number you get the exemption from import duties, if you state this number to customs. For example, you only owe VAT on the sale of the product to the private individual.
Good preparation: a number of tips at a glance
To prepare well for the new guidelines, it is useful to have a number of things in order, such as:
- Mapping the country of origin of your customers, the VAT rates per EU country you ship to and the total turnover per EU country.
- Make sure that your webshop displays the correct prices, including VAT, based on the consumer's location or address details entered.
- Follow the developments around the new rules closely, so that you are not faced with surprises.
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