As of 1 July 2021, the new rules regarding e-commerce will enter into force. These rules will change the position of suppliers and online marketplaces. These changes will lead to VAT being levied in the country of consumption. Additionally, they will make it easier for governments to levy VAT. However, there is also good news for businesses, because the new rules make it possible to file one single return through the One Stop Shop (OSS), for sales to consumers within the European Union (EU). The OSS will lead to a considerable reduction of the (administrative) burden.
From individual VAT returns to OSS return
As of 1 July 2021, sales of goods to consumers are subject to VAT in the EU country of arrival of the goods. To prevent a need for VAT registration in every EU country in which goods are supplied, it is possible to report the sales and the VAT due in each EU country, by means of the OSS.
As the VAT due is that of the EU country where the goods arrive, businesses need to determine the correct VAT rate and amount at the moment of the sale. This prevents a discrepancy between the amount of VAT received, and the amount which must be paid to the relevant authorities. This can for example be achieved by mapping the various different VAT rates applicable within the EU, beforehand, incorporating them in the system and then linking the relevant VAT rate to the EU country to which the goods are sent. It is therefore important to look at the systems, as well as the prices. Will you charge your customers the same price, regardless of where they are located? Or will you adjust your prices depending on the VAT rate? After all, the VAT rate may differ from country to country. For example, the general VAT rate is 17% in Luxembourg and 27% in Hungary.
Registering for the OSS
Registering for the OSS is therefore very interesting, as for distance sales, the VAT obligations in the whole EU can be fulfilled by means of one single return. EU businesses can only register for OSS in the EU country of establishment. Non-EU established business must register for OSS in the EU country in which the dispatch or transport of the goods begins. In the situation that the dispatch or transport of the goods begins in multiple EU countries, the non-EU established business can choose its EU country of identification.
For businesses established in the Netherlands, registration for the OSS is possible from 1 April 2021 onwards. To register, you need to have a Dutch eHerkenning login account. It is expected that registration for the OSS, for businesses which are not established in the Netherlands, will open mid-May 2021.
If you have any questions or require our assistance in any OSS-related matters, please feel free to contact us.
This content was published more than six months ago. Because legislation and regulation is constantly evolving, we recommend that you contact your Baker Tilly consultant to find out whether this information is still current and has consequences (or offers opportunities) for your situation. Your consultant will be happy to discuss the latest state of affairs with you.
