Platforms that facilitate sales to consumers
Platforms are indispensable in today’s economy. Consumers buy an incredible amount through these platforms. Platforms therefore play a very important role for both suppliers and consumers. As of 1 July 2021, a lot will change in the European Union (EU) in the area of e-commerce and VAT. New rules are set to be introduced for platforms that facilitate sales of goods to consumers.
What will change for you and your platform?
Introduction of a platform fiction
Under the new rules, a so-called platform fiction is introduced. This platform fiction determines that the platform is deemed to have bought the goods from the supplier, and subsequently to have sold them to the consumer, if the platform facilitates [the sale] (even though it is in fact the supplier who sells the goods to the consumer through the platform).
The situation can then be illustrated as follows:
The VAT consequences of both the sale by the supplier to the platform, and the sale by the platform to the consumer, depend on the flow of goods and the status of the goods.
When does this rule apply
The platform fiction applies in cases where a supply of goods is facilitated. ‘Facilitated’ means that (1) the platform puts the parties (supplier and consumer) in touch with each other, and (2) the sale takes place through the platform.
The platform does not facilitate if:
- The platform does not determine the general terms and conditions of the supply
- The platform does not need to provide approval for the invoicing to the consumer
- The platform is not involved in the delivery or ordering of the goods
Additionally, the platform does not facilitate in cases that only concern the processing of payments in relation to goods supplied, the listing or advertising of goods, or the redirecting or transferring of customers without any further intervention in the supply of goods.
In which situations does the platform fiction apply?
The fiction applies in cases where the facilitating of a sale of goods to consumers in the EU takes place, whereby the goods are transported from a non-EU country to the EU, and the (intrinsic) value of the consignment does not exceed € 150.
Additionally, the fiction applies to the facilitating of a sale of goods to consumers in the EU by VAT entrepreneurs who are not established in the EU, whereby the goods are transported to the consumers from an EU country.
What must you do to prepare your platform?
The changes mentioned above will have far-reaching consequences for platforms. Therefore, platforms will have to prepare for these changes thoroughly. There are a number of very large platforms, but there are also more and more smaller platforms. The new rules do not distinguish between platforms based on size. The changes are relevant to each and every platform.
If these changes are relevant for your platform, you need to carefully assess whether you document, in your systems, all information regarding the underlying transactions. After all, you will be performing both a purchase and a sale of the goods, so the VAT rate, the payment and the status of the goods are all relevant. From a VAT perspective, your role changes from facilitator to trader.
Also, you will need to inform the users of your platform of any changes, on time.
Do you have a business that sells goods through a platform?
Make sure you understand what changes you will face as of 1 July 2021. Reach out to the platform on time, in order to give shape to this, paying particular attention to whether the platform fiction will apply to that specific platform. Your invoicing flows may change. It is important to incorporate this in your systems on time, and to adjust arrangements where needed.