VAT on international e-commerce from 1 July 2021
VAT on international e-commerce from 1 July 2021
June 2021 – The VAT regime applicable to international e-commerce will change radically on 1 July 2021. From that date onwards, the seller will almost always have to apply the VAT regime of the country of the individual customer. To avoid having to file a return in all EU Member States, you can register for the One Stop Shop (OSS) system as of 1 April.
One Stop Shop (OSS)
From 1 July 2021, if you sell to a private customer (i.e. a customer without a VAT number) established in another Member State, you must charge the VAT of the country where the customer is established. So in concrete terms: if you sell goods to a Dutch private customer and you transport the goods from Belgium to the Netherlands (a so-called intra-Community transaction), you must charge Dutch VAT to that customer.
It follows that you must pay this Dutch VAT to the Dutch authorities and that you must make a return to them. This can be done in two ways.
Either you go to the Dutch authorities and apply for registration as a VAT payer. You can then submit a return and pay the VAT due in the Netherlands.
Or you can opt for the new alternative: the OSS. This OSS system allows you to file a return in Belgium for transactions you have carried out abroad and to make the payment directly to the Belgian tax authorities, who will then settle the account with the foreign treasuries.
You only have to make one OSS declaration for all intra-Community transactions carried out during the period in question. So if you make a delivery to the Netherlands, a delivery to France... you only need to make one declaration and one payment to fulfil all your obligations.
What's new?
The system is not totally new. There was already a Mini-OSS system for certain service provision transactions (including telecommunication services). But from 1 July this year, this will become the rule for all intra-Community transactions. Until now, you were obliged to register as a VAT payer abroad as soon as your turnover exceeded certain limits. These limits have now been abolished: you are therefore in principle still obliged to register abroad... unless you register in the OSS system.
However, a lower limit has been maintained: if you carry out intra-Community transactions of less than 10,000 euros in a B2C context, you can choose to apply Belgian VAT. This leaves a small window of opportunity for those who only sell very sporadically to private individuals abroad (in combination with a cross-border supply of goods).
The goods are already abroad
The OSS system undoubtedly has major advantages for those who regularly deliver goods from their warehouse to private customers in other EU Member States. There are, however, some points that deserve special attention.
As explained above, the OSS system only applies to sales to private individuals in combination with a delivery of goods from abroad (seen from the customer's perspective).
Let's say you have a warehouse in Belgium and you sell goods to Dutch private individuals to whom you then deliver the goods, you have to pay Dutch VAT, which you can do via the OSS system.
Let's imagine that the goods are not in Belgium, but across the border in northern France. In that case, it is still an intra-Community delivery for the Dutch customer, and the same system applies.
But what if your goods are already in the Netherlands? In that case, Dutch VAT is still due (because the customer is based in the Netherlands), but the goods do not cross any borders. There is no intra-Community supply in this case and the OSS system cannot therefore be applied. Since the old thresholds for charging Belgian VAT have been abolished, you must register in the Netherlands, file a VAT return and pay the charged VAT there.
ABC sales (triangular transactions)
Similar conclusions should be drawn regarding ABC sales. These are transactions where B (the seller) sells goods from A to C and A delivers the goods directly to C. Transactions of this kind are not unusual: one need only think of online shops which sell third party goods and which, once the order has been placed, entrust the settlement of the transaction entirely to the third party. Due to various presumptions and fictions, there is no delivery of goods between B and C (delivery is made by A to B), so that B cannot use the OSS system.
Optional
OSS is optional. You must therefore choose to register for OSS, but once you have opted for it, you cannot opt out. So if you sell goods or provide services to individuals abroad, you should certainly discuss this with your accountant in order to decide which solution is best for you.