State Secretary Snel of the Ministry of Finance has presented the draft of the Bill to implement Articles 2 and 3 of the Electronic Commerce Directive released for public consultation online. We will discuss a number of elements of this draft bill below. These new VAT rules are of particular relevance to online shop operators, amongst others.
Distance sales
VAT on the supply of goods to private individuals, where transport is carried out by or on behalf of the supplier, must be paid in the country of arrival of the goods. This is the country where the customer resides. Such distance sales naturally occur quite frequently when goods are sold via online shops.
As a result, suppliers are required to pay VAT in countries other than those in which they are established. This naturally entails additional administrative burdens. In this regard, distance sales are only subject to VAT in the country of destination of the goods if the turnover exceeds the threshold set by that country threshold exceeds.
Simplification
With effect from 1 January 2021, these thresholds will be abolished. As a result, many more businesses will have to pay VAT abroad. However, the introduction of a ‘one-stop shop’ system for these payments will simplify the process.
Under this system, all VAT is paid to the tax authorities in the supplier’s country of establishment. The EU Member States then settle this VAT amongst themselves.
Low value
With the introduction of the directive, the VAT exemption for imports of low-value goods will be abolished. These are goods with a value of up to €22. If a Dutch consumer buys a mobile phone case from China for €10, no VAT is charged on it due to the import exemption. From 2021, however, this consumer will have to pay €2.10 in VAT on the import of the case into the Netherlands. There will, however, be an option for the Chinese supplier to settle the import VAT. And there will be a special scheme for postal consignments.