Do not forget to register for VAT abroad
September 25th | Door: Harm-Jan de Boer
Are you established in the EU and do you supply goods to private customers in one or more other EU countries? And are you delivering the goods to your customers? If so, your business is regarded as so-called distance sales for VAT purposes. When exceeding a certain turnover threshold, as set by the relevant EU country, you are now liable to pay VAT on your sales in the other EU country. You have to declare your VAT there for the percentage of VAT applicable to that country.
Who are your customers?
The distance sales regulation applies to all customers who do not declare their VAT. As well as private customers, this could also include:
- Entrepreneurs whose activities are entirely exempt;
- Entrepreneurs operating under agricultural legislation;
- Legal entities that are not classed as entrepreneurs.
Threshold amounts for distance selling
Distance selling means you have to charge foreign VAT. To prevent you having to register in a different EU country for a single delivery, the EU countries have agreed on threshold amounts. Up to these threshold amounts for each country, you can charge Dutch VAT. Anything above is liable for the VAT tariff of the customer’s country.
Not every EU country maintains the same threshold amount. For instance, Belgium has set the annual turnover threshold at 35.000 euro, whilst Germany and France only oblige you to declare your VAT if your turnover is 100.000 euro or over.
What does this mean for you?
Are your total annual sales more than the threshold amount set out for a country? If so, you must charge the VAT tariff of the customer’s country. This should be done from the moment you have reached the threshold amount. You must also register as an entrepreneur in the relevant country and submit a VAT declaration there. If you exceeded the threshold amount the previous year, you are also liable to charge the foreign VAT the year after, even if you do not exceed the threshold amount in that year.
Opting for foreign VAT
If you are not prepared to constantly keep an eye on the threshold amounts and apply different VAT charges, you can choose to apply the regulations for distance selling at all times. This means that you always have to charge foreign VAT to customers who do not declare their VAT in another EU country.
Exceptions for distance selling
The regulations for distance selling do not apply to the export of:
- Excise goods to an entrepreneur who does not submit a VAT declaration or a legal entity that is not classed as an entrepreneur;
- New and nearly new transport vehicles;
- Margin goods.
Therefore, the amounts of these deliveries do not count towards the threshold amount.
Finally
If you would like to know more about these regulations and/or have you ascertained that you have been paying VAT to the wrong country for some time, then please contact us. You can also contact Harm Jan de Boer directly at hdeboer@alfa.nl or +316 51119611.
