Starting July 1, the new EU regulations on VAT for e-commerce will take effect. We’ll outline the key changes that may be relevant to our customers. We know this is a factual and in-depth topic, but as an online store owner who sells goods or services within the EU, it’s essential that you’re aware of the correct rules.
What will change as of July 1?
- The revenue thresholds are being eliminated
Before July 1, there are different revenue thresholds for countries in the EU. If your revenue exceeds an EU country’s threshold, you must calculate the VAT of the country to which you are shipping. EU countries have their own turnover thresholds. Starting July 1, those thresholds will be eliminated and replaced by a single universal threshold of €10,000 per calendar year. This threshold applies to the supply of goods to customers in other EU countries who are not required to file a VAT return (such as private individuals). If your total turnover remains below €10,000, you simply file the Dutch VAT return. Is it more than €10,000? Then you calculate the VAT of the EU country to which you delivered.
- The VAT exemption for imports up to 22 euros is being eliminated
Before the new rules take effect, you are currently exempt from VAT when you ship goods from outside the EU directly to private individuals within the EU, provided the value does not exceed 22 euros. That exemption will now be eliminated. From that point on, you must always pay VAT on your shipments, based on the country to which you are shipping the products. If you use the import scheme, where you pay VAT in a single lump sum each month for all your deliveries, you do not pay VAT upon import. If the value of the delivery is up to 150 euros, you may use the new one-stop shop system, which we will explain shortly, and your shipment remains exempt from import duties.
- A one-stop system for a single comprehensive VAT return
Another significant change is the introduction of a one-stop-shop system via the
University Regulations. You then file a VAT return every quarter, paying all VAT in a single payment. This means you pay the VAT on all supplies within the EU in one lump sum, rather than separately for each EU country. You then pay the VAT you owe on cross-border transactions to the Dutch Tax and Customs Administration, which forwards it. Deliveries to Dutch customers are not included; you file your regular VAT return for those. To be eligible to use this EU scheme, there are a few conditions you must meet:
- The goods you are shipping are already in the EU and are being sent to a customer in another EU country
- The goods are being shipped to buyers who are not required to file a VAT return, such as private individuals
- So-calledmargin goods(used items purchased without VAT), (virtually) new vehicles (such as cars or motorcycles), and “installation services” (such as awning installations) are not eligible for this scheme
- You handle the shipping of your products yourself
What does this mean for you as an online store owner?
First, it’s important to check whether the rules apply to your online store. Consider the following: Determine whether your sales to EU countries (outside the Netherlands) exceed or fall below €10,000. If you sell goods from outside the EU directly to private individuals within the EU, some changes will also apply. Finally, you must decide for yourself whether you can use the Union scheme and whether you want to, as it is not mandatory. You can find more information on the website of the
Internal Revenue Service. If none of the above applies to your online store, nothing will change for you.
