New VAT rules will apply to e-commerce from 1 July 2021. The new rules will have no impact if you only sell your own products and only serve the Belgian private market. They will apply if you sell to individuals based in other EU member states, either through your own website or in other ways.
You will exceed the new threshold amount more quickly, and will have to charge foreign VAT.
E-commerce is a booming business. Corona and the accompanying lockdowns have lowered the threshold for starting a web shop even further. As soon as you also sell and deliver online outside Belgium, this will involve quite a lot of VAT administration. Europe is now introducing new rules to reduce this red tape.
What are the current rules?
If you, as a Belgian company, sell to individuals established in other EU Member States and arrange shipping to their home address, threshold amounts already apply today. Below these threshold amounts, you can sell with the application of Belgian VAT. If you exceed the threshold in the Member State in question, you must charge the VAT of the Member State where the private individual is established. As a supplier, you must then apply for a separate VAT number in that country.
Each Member State may choose to set the threshold at EUR 35,000 (excluding VAT) or EUR 100,000 (excluding VAT). The Netherlands, Germany and Luxembourg have set their threshold at EUR 100,000. Only France has opted for the lower threshold of EUR 35,000.
With the increase in e-commerce, these thresholds are crossed more quickly in recent years. This led to an increase in the administration required for the application of foreign VAT numbers and the submission of foreign VAT returns. So there was a need for new rules.
What will change from 1 July 2021?
As of 1 July 2021, a number of things will change for online shops that send goods from Belgium to private customers located in other EU member states.
- The threshold per Member State of the purchaser will be eliminated. It will be replaced with a single threshold for all sales to private buyers in other EU Member States. This will also be much lower, namely EUR 10,000 excluding VAT. Once the sale has exceeded this threshold, VAT must be charged in the Member State where the private buyer is based.
- Once the threshold has been exceeded, no further VAT registration is required in other Member States. As a seller, you are also not obliged to submit VAT returns there.
- You can declare the foreign VAT via a Belgian declaration. As a Belgian seller, you must submit a quarterly OSS declaration (One-Stop-Shop) via the Intervat portal. This lists the sales and the foreign VAT owed on them by each Member State. These declarations must be submitted by the end of the month following the quarter.That is a slightly longer deadline than for the ordinary Belgian VAT return.
- You pay the foreign VATto the Belgian VAT administration,which then ensures the transfer of the correct amount to the other Member States.
- Carefully monitor when the threshold is exceeded. If you know that this will happen soon, however, you can opt to charge foreign VAT from the first sale to private individuals in other Member States. You can then declare this using the OSS declaration.
- In your accounting package, you must take other VAT rates into account as well as those from Belgium.
- Also check whether your products are subject to a reduced VAT rate in other Member States. The application of reduced rates and the conditions under which they apply vary from one Member State to another.
- You no longer need to issue invoices to private customers for remote cross-border sales. A confirmation of their order and the total amount to be paid, including VAT, is sufficient.
- From the beginning of April, you can already register for the OSS application via the Intervat portal. You are not obliged to apply the OSS scheme, however. For example, do you already have your own Dutch VAT number for your web shop? In that case, you can opt to continue declaring your sales with Dutch VAT using that VAT number from 1 July 2021.
When should you apply for a foreign VAT number for your web shop?
If your stock or part of it is located in another Member State, you must still apply for a VAT number in that Member State and submit a VAT return. If you sell from your foreign stock to individuals in the same Member State, you must include these sales in the local VAT return for that Member State, and not in the OSS return.
In the case of drop-shipment, the OSS scheme does not apply either. You may still need to register for VAT purposes in other Member States. We will discuss this in a separate article.
Imports of goods: IOSS declaration (OSS import)
The current exemption from import VAT for shipments of less than EUR 22 will be abolished as of 1 July 2021. In addition to the regular OSS scheme, a IOSS scheme is being introduced for goods from non-EU countries. This arrangement applies when goods with a value of up to EUR 150 are brought into the EU for subsequent delivery to a private customer.
By applying the IOSS scheme, the supplier only has to pay VAT on the actual sale in the Member State in which the goods arrive. The import itself is exempt from VAT. If the IOSS scheme is applied, a private buyer no longer needs to fear having to pay additional import VAT when buying from a web shop that ships the goods from a non-EU country.
If you are a Belgian company and you opt for the IOSS scheme, you must also apply for it via Intervat. Unlike the OSS return, you must file the IOSS return monthly. In this case, you also make the payment to the Belgian tax authorities.
Selling through other websites: how does that work?
If, as a Belgian company, you sell your goods through another website (e.g. Amazon, bol.com) and the website only acts as an agent, without buying and selling itself, then the above rules still apply to your business. The external web shop then acts purely as a so-called electronic interface. If you sell more than EUR 10,000, excluding VAT, to private individuals established in other Member States, you must charge the VAT of the Member State of the individual customer, and can opt for the OSS scheme.
If you, as a Belgian company, act as an electronic interface and thereby allow other Belgian or EU companies to offer their products on your website, you will not have any VAT obligations yourself. The Belgian or EU companies are considered to be selling directly to the individual end customers. It is up to them to check whether they have exceeded the threshold for remote cross-border sales.
If you are acting as an electronic interface for non-EU companies, an important change will apply from 1 July 2021! A new VAT fiction is being introduced. The electronic interface will then be considered to be a 'deemed supplier’. Although the sale is legally and commercially concluded between the non-EU company as seller and the individual final customer as buyer, this transaction is fictitiously split into two transactions for VAT purposes:
- The non-EU vendor is considered to be delivering to the electronic interface. This delivery is exempt from VAT.
- The electronic interface is considered to be delivering to the individual customer. The VAT of the Member State in which the transport arrived must be paid. The electronic interface can declare and pay Belgian and foreign VAT via the OSS scheme.
Would you like to know more about these new regulations? We will gladly help you with all your VAT questions. Please do not hesitate to contact our VAT team.