Accounting for e-commerce sellers and exporters in the Netherlands
E-commerce is captivating entrepreneurs in that fact you are not limited to the local market by a commercial lease and store capacities. You can ship worldwide or select lucrative national markets for your product. But entering markets is to do with local regulations and reporting standards.
Since e-commerce became a popular business model, EU authorities have passed a number of laws concerning distant sales of goods across the Union. It mainly concerns tax liabilities VAT as a complicated yet at the same time inevitable issue for sellers.
OSS schemes make things easier for e-commerce businesses. In this article, we’ll talk about the schemes, your accounting with them, and how to register for them. It applies to Dutch B2C companies and those selling goods to consumers primarily on the Dutch market.
How OSS Scheme Helps
Consider a situation when you have an online shop and sell goods like physical stuff or software or mobile phone applications to customers in several EU member states. Under the legislation, your distant sales are subject to VAT in each country where customers are located.
One-Stop Shop (OSS) is needed to avoid registering for VAT 2 to 28 times. You apply for OSS once and then do a single VAT return and a single payment. The EU jurisdiction where you have applied for OSS collects taxes and shares them with other participating member states under this regime.
OSS divides into three types - Union scheme, Import scheme (IOSS), and non-Union scheme for services. While the non-Union scheme is designed for aliens, Dutch businessmen fall into the first two groups, i.e. they are either creators of local products that can be sold throughout the European Union or importers of cheaper/ special products from outside.
Union Scheme for Dutch E-Commerce Companies
Does your Dutch e-commerce company plan to deliver goods to customers across the whole EU or several markets? This imposes obligations on you to report VAT on all these deliveries in all the respectful countries. It may turn into a big burden for a small business. So, the Union scheme comes to aid.
The starting point is that your legal person has a fixed establishment in the Netherlands and the goods are already on the EU territory. The Union scheme, however, is not suitable for every Dutch company. You have to check that your business meets the following conditions:
The goods that you sell are stored in a warehouse.
It is not margin goods like cars and motorbikes.
It is not assembly-good deliveries when a number of small shipments are combined in a single one like Ikea stuff.
You are responsible for the shipment of the goods.
Your customers are ordinary people or private individuals who do not have to file VAT returns.
With the criteria fulfilled, you proceed with the OSS registration form. You can register for the Union scheme online via the Dutch Tax and Customs Administration website. Since your company has registered for the Union scheme, you file a single VAT report 1 time per quarter.
The report is filled electronically (the “OSS Return” form) before the last day of the month following the quarter. The deadline for a VAT payment is the same. Under the Union scheme, you do not have to issue VAT invoices anymore.
You likely continue selling goods to customers in the Netherlands when entering other markets, so that within the country you run business in the usual way. You declare deliveries to Dutch customers in your Dutch VAT return and pay the tax monthly.
When Union Scheme Stops Working
Let’s consider your Dutch company is selling products to customers in Belgium, France, and Germany. You, therefore, owe VAT returns in 3 countries apart from the Netherlands. Your company fulfills the conditions and applies for the Union scheme.
From the next quarter, you file the single OSS return and pay the foreign VAT 1 time instead of 3 times. But one day the turnover to foreign customers who do not submit a VAT return exceeds € 10,000. For that supply, you must declare and pay the VAT in France (thresholds by EU countries).
Then it applies to all subsequent deliveries in the current year, and the following year, to customers in your other export destinations. For these supplies, you can use the Union scheme and pay the foreign VAT by a single payment until reaching the thresholds.
In the meantime, take into account that the OSS schemes are not a universal solution. Calculate your final costs on VAT to see and consider alternative favors for small businesses in Europe to see what’s better for you.
OSS and Cross-Border E-commerce
This exception from the Union scheme can be actually considered as a specific one. To fall under this scheme you should satisfy two conditions:
do cross-border distant sales of goods or services;
be a ‘small’ entrepreneur in a way that your maximum total turnover in the calendar year does not exceed the € 10,000 threshold (exclusive of VAT) neither this year nor the previous year.
While most e-commerce businesses have to pay VAT in the country where the customers are based, for cross-border suppliers the principle is the opposite. They are normally required to pay VAT in their home country from which the goods are dispatched.
But still, they have the option to pay VAT in the neighboring country to which the goods are dispatched. They can opt for this if the VAT rate in the neighboring country is lower than in the homeland, for example.
Again, let’s consider your company which is incorporated in the Netherlands is going to focus on cross-border sales. Then, if you sell goods to customers in Belgium, you will likely pay VAT in the homeland as in Belgium the VAT rate is at the same 21%, and there is no reason to dive into foreign accounting.
But if your Dutch company dispatches goods to German customers, you will probably like to pay VAT in Germany at a 19% rate.
NB! Don’t forget to declare your delivery in section 3c of your Dutch VAT return if you use this exception from the Union scheme.
Import One-Stop Shop via Dutch company
Are you looking to supply EU customers with goods from the outside? Setting up an e-commerce company in the Netherlands is a good option for this type of business. Given its strong logistical and language abilities the Netherlands is a great gateway to the European e-commerce market.
The import OSS scheme (IOSS) is almost the same Union scheme, but the goods are not yet in the EU. The goods are first imported to some EU country and then dispatched to European customers in different member states.
You register for the IOSS in the country where the goods have first crossed a border of the European Union. Then, via the Import scheme, you make a single VAT declaration and a single VAT payment for all your distance sales across the EU.
For using IOSS your business should meet the following requirements:
The goods come from outside of the EU.
It is not ‘excise goods’ like alcoholic beverages or tobacco products.
A shipment consisting of one or more goods costs up to € 150 (we don’t count insurance and shipping costs here).
You are responsible for the shipment of the goods.
Your customers are ordinary people or private individuals who do not have to file VAT returns.
If you are cut out for this, you can register online. You will need a Dutch VAT number to register for the IOSS. Therefore, if your importer company is initially established in non-EU jurisdiction, you need either to incorporate a company in the Netherlands or to find an intermediary partner.
A supplier that is registered for the Import scheme should file an electronic VAT report (the “Import OSS Return” form) 1 time a month. You file the VAT report regardless of whether goods were imported in any given month or not, and you pay the VAT due, to the Dutch authorities.
Using the Import scheme you do not pay VAT on the import. You do not have to issue VAT invoices on these deliveries. For a shipment, you use a single transport document like an airway bill.
When Union Scheme Stops Working
Back to our case, let’s consider you run a Dutch e-commerce business that imports goods from China to European Union. If once your shipment price exceeds the threshold of € 150, you stop using the Import scheme. Then you just declare that VAT in every EU country where you deliver.
E-commerce Accounting in the Netherlands
One-Stop Shop schemes help to reduce the burden of reporting VAT in foreign jurisdictions, but the issue is far from easy. This is especially noticeable in the background of e-commerce platforms and technologies based on the automation of repetitive tasks and convenient management.
Enty Control Panel gives you a level of convenience back. 7 essential services are available in one place to easily manage your back-office. With a custom accounting plan you will get your e-commerce accounting covered — just upload your sales reports and we take care of the reporting.
