Holland International
Distribution Council
Louis Pasteurlaan 6
2719 EE Zoetermeer
P.O. Box 660
2700 AR Zoetermeer
The Netherlands
T: +3179 – 343 8110
F: +3179 – 347 9217
info@ndl.nl / www.ndl.nl
info@hidc.nl / www.hidc.nl
CUSTOMS AND TAXATION
E-commerce and B-2-C sales to EU
clients
How to meet the challenge of EU VAT compliance for Netherlands based distributors
EU VAT considerations when selling physical
goods to B-2-C consumers
Selling products directly to private consumers, cutting
out the ‘middle man’ so to speak, is called ‘Distance
Selling’ in EU VAT regulations. Such sales are subject to
special EU VAT regulations which include special
invoicing requirements. The term ‘Distance Selling’ also
encompasses sales via catalogue and internet. In
addition, businesses engaged in distance selling across
borders have to heed specific EU VAT regulations aimed
at ensuring that customers pay the correct VAT with
respect to country and rate. Sellers are responsible for
the correct calculation, reporting and payment of VAT.
The regulations regarding distance selling only apply to
business-consumer sales. The sales to other EU
businesses which have a valid VAT ID number (i.e. B-2B sales) may be VAT exempted if the VAT liability can
be shifted to the customer. This is referred to as
‘reverse charge of VAT’.
soon as the business has reached the Finnish annual
sales threshold of € 35.000 however, then the Dutch
business must register for VAT purposes in Finland and
charge Finnish VAT (at the rate of 24%) on all
subsequent sales. The Finnish VAT collected has to be
transferred to the Finnish tax authorities.
Distance sales
The ground rules with regard to distance selling are
relatively straightforward. Businesses engaged in
distance sales (i.e. sales to EU consumers who do not
have a VAT ID number) are allowed to charge the VAT
rate of the country the business is located. Once the
particular annual sales threshold (see Table: Individual
country thresholds) has been reached however, the
business is required to apply the consumer’s local VAT
rate to the sale. This requires the business to VAT
register with the local tax authorities of that country,
and report and pay over VAT collected.
Table: Individual country thresholds (as per 1 June
2013, subject to change)
Example:
A Dutch business sells product to Finnish consumers
and applies the Dutch VAT rate (21%) to each sale. As
THE NETHERLANDS, YOUR GATEWAY TO EUROPE
Sales thresholds
Every EU country has determined its own sales
threshold. Businesses engaged in distance selling must
be aware of each different threshold since breaching a
threshold results in VAT liability in the respective
country.
Establishing a presence in other EU countries by way of
a branch or other company is not required. Only
registration for VAT purposes is a must. Such
registration carries no additional tax or other
implications.
Country
Treshold
Austria
EUR 35,000
Belgium
EUR 35,000
Bulgaria
BGN 70,000
Croatia
HRK 263,000
Cyprus
EUR 35,000
Czech Republic
CZK 1,140,000
Denmark
DKK 280,000
Estonia
EUR 35,151
Finland
EUR 35,000
France
EUR 100,000
Germany
EUR 100,000
Greece
EUR 35,000
Hungary
HUF 8,800,000
Ireland
EUR 35,000
Italy
EUR 35,000
Latvia
EUR 35,000
Lithuania
LTL 125,000
Luxembourg
EUR 100,000
Malta
EUR 35,000
Netherlands
EUR 100,000
Poland
PLN 160,000
Portugal
EUR 35,000
Romania
RON 118,000
Slovakia
EUR 35,000
Slovenia
EUR 35,000
Spain
EUR 35,000
Sweden
SEK 320,000
United Kingdom
GBP 70,000
VAT on electronic services
An important EU VAT regulation also impacts non-EU
registered sellers of so-called electronic services or eservices. The term 'electronic services' is clarified in an
annex to EU Council Directive 2002/38/EG of 7 May
2002. According to this annex, electronic services are
understood to mean:
• website supply, web-hosting, distance
maintenance of programs and equipment
• supply of software and updates thereof
• supply of images, text and information, and
making databases available
• supply of music, films and games, including
games of chance and gambling games, and of
political, cultural, artistic, sporting, scientific and
entertainment broadcasts and events
• supply of distance teaching
Businesses engaged in direct selling in several countries
can make use of the services of specialized Dutch
service providers who can ensure timely registration for
VAT purposes in the necessary countries. Such service
providers can also coordinate VAT compliance thereby
keeping things simple and efficient.
Suppliers from non-EU countries
The provision of electronic services by suppliers outside
the EU to customers in the EU (both entrepreneurs (B2-B) and non-entrepreneurs (B-2-C)) is subject to EU
VAT! The following table shows whether, where and by
whom VAT is owed.
B-2-B sales
EU based parties selling physical goods to B-2-B
customers also have to follow the EU VAT regulations.
For EU cross-border B-2-B sales the EU VAT regulations
provide for a relaxed scheme, allowing sellers to shift
the VAT burden to the customer. In practice this means
that the seller needs to establish the entrepreneurial
status of the customer. The customer can prove this by
presenting to the seller his EU VAT ID number. This
VAT number needs to be verified by the seller. If the
VAT number is valid the seller may VAT exempt the
sale to the customer. In that case the seller’s invoice
will have to refer to the ‘reverse charge scheme’
informing the customer of the shifted burden of VAT
taxation. Since the EU customer is a VAT registered
entrepreneur in his own country, he can easily report
the VAT on his purchase in his own VAT return. This is
purely an administrative issue which will not require the
customer to first pay the VAT and afterwards recollect
the same.
Table: VAT owed (on electronic services by non-EU
suppliers to EU customers)
VAT on services
The above described relates mainly to the sale and EU
cross-border delivery of physical goods. The sale of
services by an EU supplier is subject to different VAT
rules. Most B-2-C services may however be invoiced
with the VAT rate of the country of the service provider.
The sales of services to other EU businesses which have
a valid VAT ID number may also be VAT exempted
under the ‘reverse charge mechanism’ similar to the B2-B sales of physical goods.
© NDL/HIDC 2014. This document is for general guidance only.
Customer
Where is VAT
owed?
Who owes
VAT?
Entrepreneur
based in the EU
The VAT is owed
in the customer's
Member State
(pursuant to the
VAT transfer
regulation).
The customer
owes VAT at the
rate applicable
in the Member
State where he
is based.
However, the
supplier of the
services should
be in possession
of the
customer's VAT
identification
number.
Nonentrepreneur
based in the EU
The VAT is owed
in the Member
State where the
supplier is
registered
(Member State of
identification). In
that case, a
special regulation
applies.
The supplier
owes VAT at the
rate applicable
in the
customer's
Member State.
Entrepreneur or
nonentrepreneur
based outside
the EU
No VAT is owed.
Not applicable.
Important to note is that non-EU service providers,
selling electronic services may use a special one-stop,
electronic VAT filing possibility, which allows for easy
VAT compliant filing of VAT returns and payment VAT.
This is referred to as the ‘special regulation’ for service
providers of electronic services.
Changes per January 1, 2015
As per January 1, 2015, the VAT regulations on
electronic services as described above, which are
applicable on non-EU entrepreneurs, also apply for EU
entrepreneurs. Meaning all electronic services, provided
by EU-entrepreneurs will be taxed in the country of the
customer. As mentioned before, if the customer has a
VAT ID number, then the VAT may be reverse charged
to the client. If the customer is an individual, i.e. has
no VAT ID number, then it is up to the seller to
withhold the VAT and arrange for payment to the local
tax authorities which is possible via the special onestop-shop.
Intrastat
Besides the VAT implications of EU goods imports and
EU sales of goods, these transactions may also have to
be reported with Intrastat, following EU statistics
requirements. This is irrespective of the B-2-C and B-2B qualification of sales. The Intrastat reporting is
required for EU based companies that engage in
physical, cross-border goods transactions. The
reporting is required from the moment certain Intrastat
thresholds are breached. These Intrastat thresholds are
not associated with the earlier described distance
selling thresholds for B-2-C sales of goods.
NDL/HIDC and its members are happy to discuss with
you how to meet the EU VAT challenge and become tax
compliant.
This leaflet is meant as a general outline of EU VAT
considerations and related issues. It may not be relied
upon as tax advice.
This document was compiled in co-operation with
Briddge Legal & Finance, www.briddge.com.
© NDL/HIDC 2014. This document is for general guidance only.