The coronavirus pandemic, having turned the world we are used to, is forcing more and more purchases over the Internet. Therefore, legal and tax legislation must be consistent with this new reality.
Measures have already been taken at the European level since 2015 to simplify international VAT rules and to stimulate e-commerce, for example by approving Of law to combat discrimination based on geography (nationality or place of residence) when shopping on the Internet.
In addition, a separate decision was made to calculate VAT on digital services that were provided to customers in different EU member states through the implementation of MOSS - Mini one stop shop-schemes
In the Russian-language equivalent, it sounds like a "mini-one-stop shop" scheme.
Below we will tell you how the declaration is carried out using the MOSS system now, and what changes await it from July 1, 2021.
Now – MOSS Declaration
Currently, companies / entrepreneurs are required to collect VAT in the country of the customer / consumer for digital services provided to individuals.
The concept of digital services for tax purposes is divided into 3 large groups:
- electronic services;
- telecommunication services;
- radio and television broadcasting services.
For specific information on digital services according to the Belastingdienst, read here.
In other words, if you, as a company or entrepreneur who is registered and located in the Netherlands, provide an electronic service (for example, sell e-books or software) to a private person in France, then the legal framework and the French VAT rate will apply to such sale. if the customer is in Belgium, then Belgian VAT, etc.
It is in order to prevent companies / entrepreneurs from having to register as a VAT payer every time in another country where digital services were provided, and the so-called "MOSS declaration" was introduced. With this declaration, a company / entrepreneur can only register in one EU member state (eg the Netherlands). Thereafter, he can only submit one electronic VAT return for all services in all Community Member States for whose residents digital services were provided in a given reporting period.
However, it must be remembered that the use of the MOSS system depends on the amount of annual turnover of your company / business providing digital services to individuals abroad for the two previous calendar years. If these annual amounts do not exceed € 10.000, then from 1 January 2019 you must declare and pay VAT on these services in the Netherlands and you are exempt from filing a MOSS tax return.
If you still want to declare and pay VAT in the EU country where your customer / customers live, and, accordingly, register with MOSS or separately in each EU country, then you are allowed to do so.
If you sell e-services to individuals abroad for more than € 10 per year, then you are obliged to collect VAT in the client's country and therefore you must use MOSS or registration in each EU country by default. For more information on how to file an EU VAT return through MOSS at the moment, see here.
Problems of Taxation of Internet Sales
Now let's see how taxation is happening now when selling goods over the Internet.
If you, as a company / entrepreneur, sell goods through an online store to a private person in another EU Member State and transport is carried out by or at the expense of the supplier, then this is considered a distance sale.
Typically, for such distance selling, VAT is paid in the EU Member State from where the transport started, that is, in the Netherlands.
However, there are obstacles now. If you, as a supplier in a specific EU Member State, exceed the sales threshold, you must register for VAT in that EU Member State. In this case, the place of delivery for VAT purposes is the buyer's EU Member State.
Sales thresholds differ from state to EU member state and range from € 6.500 to € 100. You can find this here
Will – OSS Declaration
To eliminate these problems, from July 1, 2021, the MOSS scheme will be expanded. Earlier it was planned to do this from January 1, but due to the coronavirus crisis, the changes were postponed for six months. According to the innovations, companies / entrepreneurs that carry out international distance selling and supply goods and services to individuals online will be able to fulfill all their VAT obligations with one simple “declaration OSS"- one stop shop.
The thresholds for cross-border sales will be removed so that, in principle, foreign VAT will be applied immediately. In other words, the company / entrepreneur will be responsible for paying VAT in an EU member state from the first delivery / sale to an individual residing there.
As a result of the introduction of the OSS scheme, the supplier no longer needs to register in other EU member states and can complete the VAT return and payment in the country of residence.
And - special news for small entrepreneurs.
From 1 July 2021, they can use a simpler scheme in case the total annual turnover of distance selling and digital services to the EU member states remains below 10 euros. This means that distance selling and digital services are subject to VAT in the Netherlands and OSS registration and filing of a special declaration are not permitted.
If you have any questions related to this article and the changes indicated in it from July 1, 2021 - write to us or call, we are always happy to help you!
Publication Date: 08.02.2021
