Trade of goods within the EU
A lot of trade takes place within the European Union (EU). This is both with companies based in (other) EU countries and with businesses which are not resident in the EU but who do buy and sell goods. This so-called intra-Community trade within the EU raises many issues in the area of VAT.
Zero-rated VAT and trade of goods
Your business can apply a 0% VAT rate if you sell goods to an entrepreneur and the goods are also transported from one EU country to another EU country in this context. In day-to-day practice, the relevant conditions for applying the zero VAT rate are not always clear. It is only possible to apply the 0% VAT rate if strict conditions are met. If these conditions are not met, the 0% VAT rate is therefore not applicable.
As of 1 January 2020 the conditions for applying the 0% VAT rate have become even stricter. For each intra-Community sales transaction to which you wish to apply the 0% VAT rate, your business is required to have the buyer’s valid and verified VAT identification number. Does your business have this fully under control yet?
In addition to the substantiation of the 0% VAT rate, other administrative requirements are relevant, such as the obligation to issue a complete and correct invoices and to have sufficient proof of transport. There are also extensive reporting obligations. For example, as well as your VAT return, you are required to file an EU Sales list and in certain cases to provide data to the Dutch statistical authorities.
Online shopping within the EU
It is hard to imagine our society without online shopping. The e-commerce sector continues to grow and this growth has gained even more momentum as a result of the COVID-19 outbreak. Online shopping within the EU naturally involves VAT consequences for the seller. Do you sell products to consumers in EU countries? Are you fully aware of your company’s VAT position? We would be glad to be of assistance.
In the near future, many changes will take place with regard to the e-commerce sector in 2021. The changes may work to your advantage, as long as you implement the changes within your organisation on time.
If you are not compliant with the current VAT laws and regulations in the countries where you do business, this may negatively affect your business. We would be glad to help your business assess and reorganise your supply chain and related obligations.