Legislative changes to VAT 2019

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As part of a larger set of changes to VAT within the EU, a number of changes came into effect per 1 January 2019. These changes are specifically aimed at businesses which provide so-called telecommunication, broadcasting and electronic services (“digital services”) to consumers. Have you processed these VAT changes in your business yet?

VAT threshold for small businesses providing “digital services”

As of 1 January 2019, businesses which provide digital services to end-consumers in other EU countries may apply the VAT rate of their own country of establishment. One of the conditions for this is that the annual cross-border turnover from those services should not exceed the threshold of € 10.000.

Simplification of proof of residence

Additionally, a simplification was introduced per 1 January 2019 with regard to proving the place of residence of the end-customers. Under certain conditions, entrepreneurs who provide B2C (Business-to-Consumer) digital services to end-consumers in other EU countries may accept a single piece of evidence provided by a third party. This too is conditional on the annual turnover from these services remaining below a threshold of € 100.000.

Expansion of the MOSS scheme

Certain categories of businesses can use the Mini One Stop Shop (MOSS) scheme to report and pay the VAT on their digital services in a single EU country. This is also the case if part of these services take place in other EU countries. Entrepreneurs resident outside of the EU who have obtained a VAT registration in one of the EU countries, can also make use of this scheme.

Simplified invoicing rules

In cases of B2C digital services, entrepreneurs are obliged to issue an invoice. As of 1 January 2019, the invoicing rules of the EU country in which the service provider is registered for the MOSS scheme, may be applied.

The above mentioned changes primarily concern simplifications of the VAT legislation and in most cases are favorable for e-commerce businesses. However, please note: the changes mentioned are based on the Dutch implementation of EU law. Other EU countries may have adopted different rules.

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