Dutch VAT compliance of international product deliveries
A good knowledge of the VAT directives is essential, especially when you run a business abroad. Administration, compliance and their conditions… You need to know all of the followinf stipulations and adhere to them:
- export deliveries;
- deliveries to entrepreneurs;
- deliveries to private individuals;
- simplifications on the horizon?
International businesses require a structured approach to VAT. This also applies to services and deliveries of products. As their VAT compliance differs, it is important to distinguish services from products. VAT on the latter focusses on the product. In case of deliveries, however, the countries where the product departed or arrived are the main indicators.
When the country of departure and arrival differ, an international delivery occurs. How such export deliveries are charged, depends on whether or not the delivery surpassed EU borders. If the products are delivered outside the EU, the VAT rate is 0%. This should be justified in the VAT compliance (section 3a) with the necessary documents:
- Order or order confirmation;
- Credentials on the invoice;
- Payment from abroad;
- Export and Import documents;
- Transport documents;
- Transport insurance:
- Invoice of the transporter;
- Track and trace messages of the transporter;
- Communications with the customer about the transport, such as a delivery order or arrival confirmation.
There are several conditions for the invoices of international deliveries. First of all, they should stipulate the VAT identification number of the customer (in case of an entrepreneur customer). Second, they need to mention the international character of the delivery as well. Thirdly, including both the address of departure and of arrival is always to your benefit. This will facilitate the administration later on. Finally, you should always keep in mind that simplified invoices are strictly forbidden when it comes to export deliveries.
Delivering products from the Netherlands to customers residing outside the EU is levied with 0% VAT. This advantage, however, comes with a condition. The customer must prove his entrepreneur status by his VAT identification number. In addition, you should demonstrate that the products have left the Netherlands. Here, the previously mentioned documents are of use. The matter gets more complicated in case of collection transport or transport arranged by the customer. You can hardly prove these deliveries took place. Yet, the 0% VAT still applies if the customer is a regular client in possession of a collection statement.
Deliveries inside the EU, on the other hand, must be justified in section 3b of the VAT compliance. Second, ICP compliance is obligated as well. In this statement of inter-community transactions you clarify your revenue per VAT identification number. If the revenue of the international deliveries on the VAT compliance does not meet the revenue of the ICP compliance, tax authorities will issue a tax investigation letter.
Moreover, the deliveries of goods to entrepreneurs in another EU-member, are generally zero-rated.
Besides entrepreneurs, you might also deliver products to private individuals. Nevertheless, the distinction between deliveries within or outside the EU once again determines VAT compliance.
The country of departure levies VAT on deliveries across EU-borders. Contrary, accidental or limited deliveries restricted within EU borders should be filed in the Netherlands. The Netherlands apply a VAT rate of 6% or 21%. However, the story differs for large-scale inter-EU deliveries. It is to your benefit to account for their revenues per EU destination, since every EU country operates with a revenue threshold. Deliveries surpassing this threshold will be charged with VAT in the country of destination. This implies a local VAT registration and VAT compliance for the revenue concerning private, non-entrepreneur, customers. Finally, in case your revenue transgresses the threshold for VAT to be filed in the Netherlands, you should mention them in section 3c.
The European Commission proposed simplifications to the VAT filing system. The motion suggests a MOSS compliance for VAT on distance selling, starting January 2021. If the bill goes into effect, VAT registration in several EU members will no longer be needed. Furthermore, the current difference between revenue thresholds will be leveled out. The new threshold of EUR 10 000 will apply to all distance selling and digital services within the EU. Despite the advantage of a single compliance system for all export transport, you will more easily be faced with the VAT rates of different EU countries.
Would you like more information on international deliveries or taxes in general? Please do not hesitate to contact us. DTS is happy to help you.