Businesses are under no obligation to use the import scheme. If the import scheme is not used, VAT will be owed at the time of import into the EU.

This VAT is usually remitted upon import by the postal operator or courier delivering the products to the consumer. The postal operator or courier collects this VAT at the time of delivery to the consumer.

To prevent postal operators and couriers from having to prefinance this VAT, a special arrangement for postal operators and couriers will be introduced on 1 July 2021. By using this arrangement, postal operators and couriers can remit the VAT via a separate monthly return. This allows them to first collect the payable VAT from the consumer.

The arrangement for postal operators and couriers can only be used for imported goods with an intrinsic value of no more than EUR 150.

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The Import Scheme and the corresponding Import One Stop Shop (I-OSS) can only be used for imported goods with an intrinsic value of no more than EUR 150.

By using the import scheme, consumers will not be surprised by VAT to be paid when they receive their products. In addition, because of the exemption at the moment of import, businesses will not have to prefinance VAT if they are the party importing the goods. As is the case for the OSS, use of the import scheme is not obligatory.

The I-OSS return is separate from the OSS return and must be submitted on a monthly basis. The I-OSS can be used both by non-EU businesses and by EU businesses. If a non-EU entrepreneur decides to use the import scheme, a representative must be appointed. 

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The current Mini One Stop Shop (MOSS) will be extended to the One Stop Shop (OSS). Under the MOSS scheme, businesses can declare the VAT owed for cross-border digital services to consumers.

The (new) OSS can be used for:

Via the OSS, businesses that owe VAT in multiple EU Member States can declare and pay VAT by means of a single OSS return in the country of residence.

The country of residence/registration of the business then remits the VAT owed by the business to the other EU Member States.

The OSS return must be submitted each quarter and is separate from the regular turnover tax return. Input VAT cannot be reclaimed via the OSS.

If the OSS is used, the obligation to provide the consumer with an invoice no longer applies. However, businesses are under no obligation to use the OSS. If the OSS is not used, the business must register for and remit VAT in all EU Member States in which it provides products or digital services. In that event, the business is also obliged to issue an invoice to the consumer and to comply with the invoicing requirements applicable in that country.

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If a digital platform makes it possible for businesses to use the platform to sell products to consumers, it can be held liable for the remittance of the VAT.

A digital platform is only liable for the VAT if the platform is involved in the consumer sales process. This is the case when the digital platform establishes general terms and conditions to be accepted by the consumer, exerts influence on the invoicing and payment process, or has any involvement in the shipping of the goods. The dispatch of a shipping confirmation to a consumer, for example, is at present considered sufficient to establish the liability of a digital platform for the payment of VAT.

A digital platform is only liable for the VAT in the following two cases:

Distance sales of imported goods with an intrinsic value of up to EUR 150. 

Distance sales by non-EU businesses of goods already in the EU. 

If a digital platform is liable for VAT for distance sales, a notional B2B delivery from the business to the platform is followed by a notional B2C delivery from the platform to the consumer. The goods are actually delivered directly to the consumer by the business.

The notional B2B delivery is exempt from VAT, with a right of deduction of the input VAT. The notional B2C is subject to VAT. The digital platform must remit VAT in the Member State of receipt by the consumer.

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The importation of goods by/for the account of consumers with a value of up to EUR 22 is exempt from VAT until 1 July 2021. At present, it is easy for consumers to order goods from a third country (e.g. China). If they import these goods and the value of these goods is EUR 22 or less, no VAT is owed on the importation thereof.

At this time, the VAT exemption for small consignments is leading to unfair competition between EU and non-EU businesses. The latter group is not required to charge VAT and is therefore able to offer its products to consumers at lower rates. Also, the EU is missing out on a considerable amount of tax revenue due to this exemption. By eliminating this exemption, the EU hopes to prevent unfair competition and generate more tax revenue. 

The elimination of the exemption might lead to consumers being surprised by VAT charges upon receipt of the goods. To avoid this, with effect from 1 July 2021, businesses will be able to avail themselves of the Import One Stop Shop (I-OSS).

How the I-OSS works is explained in more detail here The introduction of the import scheme (Import One Stop Shop).

The customs legislation will not change with effect from 1 July 2021, as a result of which the importation of goods with a value of up to EUR 150 will continue to be exempt from import duties.

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The current threshold for distance sales applies per individual EU country. Member States are free to determine the threshold amount for their country. That is why the threshold varies from EUR 35,000 to EUR 100,000.

If the threshold applicable in a EU Member State is exceeded in a given calendar year, the business is obliged to register for VAT purposes and pay VAT in that country. Businesses currently are not obliged to apply the thresholds for each individual Member State and can always decide to remit and pay VAT in the country where the goods are received by the consumer/the country of use.

Because of the different thresholds for distance sales, businesses need to monitor whether the threshold is exceeded in each EU Member State to determine whether VAT registration and payment are required. This involves a high administrative burden. In addition, businesses are often too late in discovering that the threshold has been exceeded, as a result of which they are unable to comply with their VAT obligations in good time.

Effective 1 July 2021, the distance sales threshold per EU Member State will be abolished and replaced by a single threshold of EUR 10,000 for the delivery of goods and digital services. The new threshold of EUR 10,000 means that truly small enterprises are not directly affected by the rules for e-commerce.

Because the threshold is being abolished, a business will always have to remit VAT in the country where the consumer uses the goods. To prevent businesses from having to register for VAT purposes in multiple EU Member States, it will be possible to submit a One Stop Shop (OSS) VAT return.

Find out more about the One Stop Shop here One Stop Shop return or download our whitepaper here.

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The VAT system is based on the same basic principles in all EU Member States. The purpose of VAT is to tax consumption by consumers. The business is the party that collects the tax from the consumer and remits it. In principle, therefore, VAT is owed in the EU Member State where the consumer uses the goods.

Every business must deal with VAT to some degree. Businesses remit part of the turnover from each sale to the tax authorities in the form of VAT.   

In the past, consumers did most of their shopping locally. In today’s digitised society, however, consumers increasingly shop online. As a result, consumers will often purchase a product from a business established in another Member State. This imposes an obligation on the business to ascertain the country in which VAT must be remitted.

In addition, imports by consumers of products from third countries (countries outside of the EU) are sharply increasing, and more and more digital services are being provided to consumers in other Member States.

The current VAT rules for e-commerce are complicated and no longer in line with our increasingly digitised society or the blurring borders in the retail environment.  That is why the VAT rules are being amended effective 1 July 2021. The amendments only pertain to sales to consumers (B2C). The rules for B2B sales will remain in force.

The most important amendments are:

• The abolition of the distance sales thresholds

• The elimination of the VAT exemption for small consignments.

• The introduction of platform liability.

• One Stop Shop return.

• The introduction of the import scheme (Import One Stop Shop).

• A special arrangement for the remittance of VAT by postal operators and couriers.

Click for more information on these subjects or download our whitepaper here.

For other questions about e-commerce, you can always contact our office at +3120 760 4500.

During the old normal, we were already steadily moving towards more and more online shopping, but the year 2020 has rapidly boosted online sales even more. Not only are we increasingly purchasing directly from manufacturers spread across the world, but we are also making many of these purchases via relatively new market players known as platforms. This means that consumers can now choose from a far greater range of products and suppliers and that suppliers and manufacturers can reach a far greater target group through this e-commerce market. This new reality has given rise to new challenges, not only in the area of logistics but also in the area of taxes.

In the past, consumers would walk to the corner shop and could only buy what the shopkeeper had to offer, but with the world in our back pocket we can now easily buy from suppliers spread across the entire world. Every retailer in obliged to pay over part of their sales turnover to the tax authorities in the form of VAT. In the old situation, sellers easily knew which tax authority they had to pay that VAT to because they were physically selling from and in the Netherlands. In the online world, sellers are quickly faced with tax obligations abroad, because one of the basic principles of VAT is that the tax is due in the country where consumption takes place. Sellers must therefore pay VAT in the country where the product is used, which is why VAT is generally charged in the country of destination for products or in the country where the consumer resides for services. New rules will apply as from 1 July 2021 for the purpose of simplifying such VAT payments to the various EU Member States. You can find a short list of the impending changes below, but VanLoman is of course more than willing to further guide you through these rules.

Threshold amounts will no longer apply to distance sales

As from 1 July 2021, Dutch suppliers selling to private customers outside of the Netherlands will virtually always have to charge and pay VAT in the other EU Member State. Under the current rules, rather generous threshold amounts still ensure that VAT registrations and reporting foreign VAT is necessary only when the threshold amounts are exceeded. While a threshold amount will remain in place, it will be lowered to just EUR 10,000 – substantially lower than the current threshold amounts that still vary from one EU Member State to the other. This threshold amount will apply to all distance sales of goods and sales of digital services to consumers. If your total amount of sales in individual EU Member States stays below EUR 10,000 each year, your Dutch online store can continue to charge Dutch VAT assuming that the transport supply starts in the Netherlands and that you are established (primarily of through a fixed establishment) in an EU Member State.

If your sales exceed the threshold amount of EUR 10,000, you must charge the VAT applicable in the EU Member State where your customer resides and file a local VAT return in the country in question (using a local VAT registration) or through use of a simplified VAT return.

VAT exemption for imports of consignments of limited value (EUR 22) abolished

Consignments worth up to EUR 22 are currently exempt from import VAT when imported into the EU. This exemption will no longer be in place, meaning VAT must be charged for all supplies – including those from outside of the EU – to the private customer in the country of arrival of the goods. However, imports worth up to EUR 150 will remain exempt from customs duties.

Platforms that play an “active role” will become liable for the payment of VAT

In principle, every seller is responsible to account for and pay the VAT on their own respective sales.. However, under the new VAT rules, platforms can also become liable for this payment of VAT if they play an active role in the conclusion of the sale. An active role involves more than just digitally matching supply and demand. A platform playing an active role supports the purchase and supply of products to private customers and therefore owes VAT in the country where the customer resides. In addition:

• Suppliers supply goods to consumers in the EU through the platform.
• The value of the goods does not exceed EUR 150.
• The goods are imported into the EU.

If the value of the consignment exceeds EUR 150, the platform will also owe VAT if it facilitates the supplies made to a consumer by a company established outside the EU and the goods travel from one EU Member State to a consumer in another Member State.

Based on these new liability rules it is not only important for suppliers to verify their obligations but increasingly so it is also important for platforms to check their exact role in the sales process. This is determined in large part by the general terms and conditions and the “customer journey”. Naturally, VanLoman will gladly bring you up to speed on this and help you determine your exact obligations.

Simplified VAT return

The new VAT rules for e-commerce will also introduce a simplified VAT return, which will ensure that not every delivery abroad will immediately require a foreign VAT registration. Such a system already exists for digital services: the Mini One Stop Shop, or MOSS scheme. This scheme will be expanded and renamed to One Stop Shop (OSS) following the legislative change. If both types of supplies – digital services and goods – exceed the threshold amount of EUR 10,000, you can file your return using this portal.

Thus, starting 1 July 2021, companies can report any VAT owed in other EU Member States for supplies of services or supplies of goods to the tax authorities using the OSS portal. In that case, you will not need a VAT registration in other EU Member States. The Dutch Tax Authorities will then ensure that the VAT amounts reported through the OSS portal are sent to the correct EU Member State. Please note that you may only use the Dutch OSS for sales from the Netherlands, excluding any stocks / warehouses kept outside of the Netherlands. Deliveries from such locations will likely still trigger a local VAT registration.

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The coronavirus (COVID-19) is currently dominating our personal lives but it also has an unprecedented impact on businesses financially. Organisations around the globe have been hit hard by uncertainty and the impact of measures imposed to limit the rapid spreading of the virus.

The Dutch government has introduced several schemes throughout the year that may support your business on a financial economic level. The specialists at VanLoman are well informed about all these schemes and will gladly assist you in applying the correct schemes to your company.

Cashflow management

n times of financial crisis, cashflow management is more important than ever. A close look at your pattern of income and expenditure may substantially improve control over your liquidity position. At VanLoman, we help our clients achieve better control over the payment of taxes and ensure a timely refund of previously paid taxes.

By taking into account the financial impact of COVID-19, it may already be possible to adjust your internal transfer pricing. In addition, once the financial impact on your business for this year is clear, the taxable amount on the corporate income tax assessment can be lowered which results in direct cash flow benefits.

Smart use of tax loss settlement for corporate income tax may also yield a positive cashflow for your company. If a loss is incurred this year, for example, that loss can be set off against a profit from the previous year. In that case, it may be advisable to submit the corporate income tax return quickly, allowing for a faster refund of previously paid corporate income tax immediately after the submission of that tax return, under certain conditions.

There are also options to improve your cashflow position in the area of VAT. Costs are ongoing, while the turnover tends to fall for a lot of businesses. This has pushed more businesses into an effective VAT refund position on their VAT returns. If your company structurally asks for a VAT refund on its VAT returns, it may be useful to file monthly VAT returns (instead of quarterly). That way, the company will receive quicker refunds from the Dutch Tax Authorities. Another way to benefit more quickly from a VAT refund position is the option to set off VAT against payroll taxes. In that case, the VAT refund position reduces the amount of payroll taxes owed, which has an immediate positive effect on your cashflow.

NOW scheme

The temporary Emergency Bridging Measure for Sustained Employment (NOW, short for Noodmaatregel Overbrugging Werkgelegenheid) was created to help employers deal with loss of turnover due to the corona crisis. The NOW has three different application periods (also known as NOW 1.0, NOW 2.0 and NOW 3.0), which each have their own rules and effects. VanLoman can help you navigate this maze of rules so that you can remain focused on your company.

Other corona measures on which VanLoman’s experts regularly give advice include:

• Temporary reduction of interest on overdue and underpaid taxes
• Covid measures on the hourly criterion for private individual entrepreneurs
• No VAT on the sale of face masks after 25 May
• Application of reduced VAT rates for online sports lessons
• Expansion of the tax-free margin
• Conditional cancellation of fines incurred for failing to pay
• Unblocking of and withdrawal from G account
• Travel restrictions and substance requirements

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The European Union and the United Kingdom (UK) have reached agreement on a new partnership. Although this deal is a great help, the way we do business with the UK will change regardless.

The UK (England, Scotland, Wales and Northern Ireland) is no longer part of the EU. Formally, this has already been the case since midnight, 31 January 2020, but mutual agreements provided for a transition period until 31 December 2020 that meant virtually nothing had changed for business and citizens.

The trade agreement concluded between the EU and the UK on 24 December 2020 has entered into force provisionally with effect from 1 January 2021. While this agreement arranges a number of important matters for mutual trade, the way we do business with the UK nevertheless changed with effect from 1 January 2021 because business and citizens are now also faced with the fact that the UK has left the EU.

We would like to list a number of important changes for you below. Naturally, VanLoman is more than happy to map these changes for your business and to help further implement the changes.

Customs formalities

Every movement of goods from the EU to the UK and vice versa is seen as the export and import of those goods, and thus is accompanied with the associated formalities. If your business sells goods to customers in the UK, for example, that sale from the Netherlands qualifies as an export sale and you or your customer must then import the goods into the UK. This does not only trigger new tax considerations, but more importantly can effect commercial negotiations.

In order to transport goods to and from the United Kingdom, your company will need an Economic Operator Registration and Identification (EORI) number. The goods must be reported to Dutch and British Customs authorities. If you have a representative in the UK who will do this for you, check whether they have a British EORI number. If that person does not have an EORI number or if you will declare the goods yourself, make sure that you also have a British EORI number.

Depending on the type of goods (and associated commodity code), you may have to pay customs duties. The free trade agreement that entered into force between the EU and the UK as from 1 January 2021 has reduced the import duties applicable when importing goods into the EU or into the UK. This reduction (to 0) is subject to the condition that the goods in question are of preferential EU or UK origin.

Changes do not only occur when you sell goods, but also when you send your employees to the UK to perform work there; in that case, you must consider not only work permits, but also the formalities for importing – even temporarily – the necessary tools and parts. VanLoman can help you understand these formalities.

Import VAT

Importing goods, whether from the UK into the EU or into the UK from an EU Member State, also creates the liability to pay import VAT. The basic principle is that this VAT is payable immediately at the border and that business owners can later recover that VAT on their regular VAT returns. In the Netherlands, a VAT deferment license within the meaning of Article 23 of the Dutch Turnover Tax Act may result in cashflow benefits in the event of frequent imports. Such a license releases the holder from the obligation to pay VAT immediately at the border. Your business can then report the VAT owed in the VAT return and immediately deduct the VAT in that same return, effectively without first having to pay to the Tax Authorities.

VAT registration

Because the UK is no longer an EU Member State, you are no longer able to use EU systems for British VAT returns pertaining to periods in 2021 as of 2021. For example, the rules of the mini one stop shop (MOSS) return no longer apply to sales taxable in the UK. Thus, if your company provides electronic services to private individuals in the UK, it will require a new local VAT registration, for which you must also regularly file VAT returns in the UK.

Similarly, the EU rules for distance sales no longer apply for deliveries to the UK, meaning any sale and supply to a private individual in Britain from the EU now qualifies as an export, for which you or the private individual will have to import the goods into the UK. Furthermore, specific rules have been introduced which provide that any sale from the EU to private individuals in the UK worth less than GBP 135 must always be treated as a local supply of goods (taxable with UK VAT in the UK). In that case, you will likely need your own VAT registration in the UK to account for VAT on such sales. VanLoman will gladly help you assess to what extent your current general terms and conditions have to be adjusted to accommodate this situation.

Reclaiming VAT

As from 1 January 2021, filing a request for refund of EU VAT (e.g. Dutch VAT) by business owners in the UK is being treated as an application for VAT refund within the meaning of the 13^th Directive. The processing time for such applications may be substantially (up to 6 months) longer as a result.

If you wish to reclaim UK VAT for the year 2020 as a Dutch business owner, you can still do so via the regular EU VAT Refund Portal in the Netherlands until 11 p.m. on 31 March 2021. For after that date and for VAT charged after 2020, the UK has introduced a manual VAT reclamation process.

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