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As an entrepreneur, you often see opportunities outside the Netherlands. Perhaps foreign customers are even more into your products than Dutch ones. A first step can be the transportation of products to a foreign agent who will sell them for you. This is where VAT comes into the picture. Using a few examples, and a change as of January 1, 2020, I will show what you should pay attention to.
Sale on the market
A simple example of showing how VAT works when selling abroad is market vendor selling abroad. A Dutch entrepreneur drives their van full of products to Germany, unloads them and sells them at a market. At the end of the day, they drive back to the Netherlands with an empty van.
The moment the Dutch entrepreneur crosses the border, there is a VAT chargeable event. The transfer of personal goods from the Netherlands to Germany is so-called notional intra-Community supply. The entrepreneur reports this transfer in his Dutch VAT return as if they have sold the goods to a foreign entrepreneur. The sales in Germany are then taxed with German VAT. The Dutch entrepreneur therefore needs a German VAT number to pay the German VAT due. They also provide their German VAT number as recipient of the notional intra-Community supply.
Sales through a representative
Doing business yourself abroad is not for every entrepreneur because of cultural differences, for example. It is therefore often the case that Dutch entrepreneurs appoint an agent who sells products for them abroad. In the example, I assume that it is an agent in Germany who sells goods to foreign customers in their own name. Usually, the agent does not want to pre-finance inventory, so that the Dutch entrepreneur brings stock abroad, but still remains its owner. Here, too, there is notional intra-Community supply and subsequent sale to the agent with German VAT. In this situation, the Dutch entrepreneur must therefore also register for VAT in Germany.
Call off stock
In the aforementioned examples, registration abroad is an obstacle to international trade. The European Commission has also seen this, so that as of 1 January 2020 there has been a simplification within the EU for so-called call-off stocks. The conditions of the call-off stock arrangement are:
the entrepreneur who transfers the goods is not established in the country of arrival of the goods;
the entrepreneur for whom the goods are intended, is known in advance and is registered for VAT in the country of arrival of the goods;
The withdrawal from stock must take place within one year after transfer.
If the conditions have been met, the transfer abroad is not notional intra-Community supply. Instead, when goods are withdrawn from stock, there is “normal” intra-Community supply, which is subject to a 0% charge. This removes the need for registration abroad. In the example of sales through an agent, this can be a way of simplifying sales abroad for the purposes of VAT.
Expansion of your business activities abroad can have a considerable impact on VAT. By examining the consequences in advance and possibly changing the method of sale abroad, you can prevent penalties and fines there. Since January 1, when keeping stock abroad, there are more options of avoiding having to register for VAT there.