When delivering goods to individuals (non-entrepreneurs) inside the EU, you might have to deal with foreign VAT registration and obligations. The threshold for VAT on cross-border deliveries from the Netherlands, for example, varies depending on the EU member where the goods in question were delivered (in most countries, the threshold is set at € 35,000).
Does your turnover on deliveries in a specific EU member surpass this VAT threshold during the financial year? Well, then you will need to register for VAT and file a VAT return in that country.
If, however, you deliver locally stocked goods, there is no VAT threshold. Nonetheless, you should always register for VAT in the EU member where the foods are stocked and declare VAT locally. Yet, for small volumes, the costs on compliance might outweigh the benefit in delivery charges.
When you distribute these locally stocked goods to other EU members, on the other hand, thresholds might apply. Hence, you should always mind the VAT thresholds in question to know whether or not you must register as a local VAT payer.
Changes are ahead, though. As of 2021, a significant simplification of the VAT rulings on distance selling (when the vendor must deliver the sold goods to a private individual) will go into effect. Instead of registering for VAT in all EU destinations separately, you will have to file a single VAT return in the country of departure, declaring all VAT due.
Nevertheless, there are several important side notes to be made:
- When stocking locally, you still have to register for VAT in the country where these goods are stocked. In addition, you will have to declare VAT in that country, even after the upcoming simplification. For this, there is no VAT threshold to resort upon;
- The various thresholds of EU members will be replaced by one and the same threshold of € 10,000 for the total sum of turnover made on deliveries to individuals (non-entrepreneurs) in Europe, regardless of the particular EU member in which the goods were delivered.
- Contrary to the introduction of this single threshold, is the awareness of the various rates at which the EU members levy VAT. As a result, you still have to take the different VAT rates into account when surpassing the aforementioned threshold of € 10,000. These rates do not only differ according to EU member. Most members also apply various rates, depending on the kind of goods. Moreover, each member state is free to choose its own classification, resulting in even more factors and conditions to keep in mind.
Please feel free to contact us for more information.