Changing VAT rules as of July 1, 2021
Changing VAT rules as of July 1, 2021As of 1 July 2021 the new rules with respect to supplies to private individuals will start in the EU! These changes are often referred to as change to the VAT rules for E-commerce.
Armand Fanchamps
Armand Fanchamps

Tax advisor
+31 (0)481 - 36 58 20

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Changing VAT rules

15-6-2021

As of 1 July 2021 the new rules with respect to supplies to private individuals will start in the EU! These changes are often referred to as change to the VAT rules for E-commerce:

Changes

For a long time, there was a great deal of uncertainty as to what these changes would mean in practice. In the meantime, the necessary clarity has been provided. If you supply goods and services to private individuals in the EU, now is the time to take action. Note: you may even have to take action before 1 July 2021!

The changes will affect:

  1. supplies to individuals in other EU countries.
  2. electronic and telecom-services to consumers in other EU countries

The effect of the new rules will be that VAT will be due sooner in the EU-country of the consumer! If you are not careful, you will have to register for VAT and file tax returns/tax returns in all EU countries where you supply to consumers.

Is this rule change important to you?

To help you determine if these changes will affect your business, we kindly ask you to answer the questions below:

  1. Do you sell and ship goods to consumers in another EU-country?
  2. Do you provide electronic or telecom-services to consumers in other EU countries?
  3. Does the shipment of goods start in EU-country 1 (e.g. Netherlands) and end in another EU country (e.g. Germany or Belgium)?
  4. Do you expect all sales (i.e. all EU-countries combined) listed under 2 and 3 from 1 July 2021 to 31 December 2021 to exceed the € 10,000 delivery threshold?
  5. Do you expect this threshold to be exceeded in 2022?
  6. Will the shipment of the goods start from a non-EU country and will the goods then be directly delivered to the private individual?
  7. Are the goods referred to in 3 above sold via a platform, such as Bol.com or Amazon.nl?
  8. Do you currently provide services to consumers in other EU countries (such as services relating to property or providing access to events), for which you are currently registered abroad and on which you pay VAT in another EU Member State?

If your answer to any of the above questions is 'yes', please contact us soon. Together we can determine which steps need to be taken. For example: (a) which VAT rate should I apply, (b) how do I know that I am dealing with a private individual, (c) how do I ensure that I charge the correct VAT rate and (d) how do I ensure a correct VAT return and (e) where do I file it?

What is meant by private persons?

It is useful to know that ‘consumers’ are defined as:

a. A private consumer (private individuals)
b. International organisations with a special status, such as diplomatic entities, international bodies, NATO, etc. 
c. VAT-registered customers who only supply VAT-exempt services.
d. VAT-registered customers who can apply a special agricultural VAT regime.
e. VAT-registered persons who apply the margin scheme.
f. Entities not subject to VAT (legal entities, government bodies, NGOs, etc.)

One-Stop-Shop-scheme

Please note: the effective date of the new rules is 1 July 2021. If the answer to any of the statements above is 'yes', then registering for the One-Stop-Shop scheme with the Tax and Customs Administration is probably the best and cheapest solution for you in the short term (this month). If you do not opt for the OSS scheme, you will have to register everywhere in Europe and file and remit VAT there (expensive and time-consuming)!

The alternative is to register for the Union scheme and the One-Stop-Shop (OSS) scheme. If you register (on time), you declare both the Dutch and foreign EU VAT via the Dutch VAT return. The Dutch Tax and Customs Administration takes care of the remittance of the VAT in the correct EU Member States.

If you opt for the OSS scheme, you must register via the online portal of Mijn Belastingdienst Zakelijk. For this you must have an eHerkenning account. As a taxpayer you must apply for en eHerkenning account or you must apply for an eHerkenning authorisation for BonsenReuling. We can help you with both and then (together with you), submit the OSS registration.

For the sake of completeness, we further note:

  1. Registration is not required for a turnover within the EU of up to €10,000: you will 'simply' continue charge the Dutch rate on sales to consumers in other EU-countries.
  2. Every euro over €10,000 is taxable in the buyer's country.
  3. To avoid having to keep an eye on the €10,000 limit, you can also apply the VAT rate of the customer's country from the first euro. You must, however, inform the tax authorities (in good time) that you are waiving the €10,000 limit. We can assist you if required.
  4. Excise goods (such as wine, vodka, gin and beer) do not fall under this new scheme.
  5. The OSS scheme is only meant for the payment of VAT. Should you have paid foreign VAT, then you can reclaim this VAT in the 'normal' way. In many cases, this will be via the Portal of the Dutch Tax and Customs Administration.

Questions?

Should you wish to contact us, please contact Louise Tirion l.tirion@bonsenreuling.nl (+31 (0)481-36 58 20) or Armand Fanchamps a.fanchamps@bonsenreuling.nl (+31 (0)481-36 58 20 / +316-12 07 10 35).

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