From 1 July 2021, companies selling goods via web shops will have to deal with foreign VAT and the related obligations much sooner when selling goods to private individuals in other EU Member States. From that date, the current thresholds for distance selling will disappear and be replaced by a single general threshold of €10,000 across the EU. To avoid companies having to register for VAT in all these Member States, this foreign VAT can, from 1 July 2021, be accounted for via the centralised One Stop Shop return. On 1 April 2021, the Belgian VAT Administration opened the portal in which your company can now register for this One Stop Shop regime.
Current VAT rules for distance selling
Until 30 June 2021, a separate turnover threshold ranging from €35,000 to €100,000 continues to apply to distance sales for each EU Member State. As long as a business makes distance sales from Belgium to other EU Member States and has not exceeded the threshold applicable in that other Member State, the Member State of arrival, the supply remains, in principle, subject to Belgian VAT (unless the seller explicitly opts to pay VAT in the Member State of arrival). If this threshold is exceeded in the Member State of arrival, then VAT will in any event be due in that Member State. As a result, a VAT number must be obtained in the Member State concerned, local VAT must be charged and periodic VAT returns must be submitted locally. Since there is no uniform VAT rate in the various EU Member States, the web shop must also determine the correct VAT rate for the different Member States.
New regulations for distance sales (from 1 July 2021) - One Stop Shop
As from 1 July 2021, the different thresholds applicable for each Member State of arrival of the goods will cease to apply. These will be replaced by a single general threshold of €10,000 for all distance sales to other EU Member States. If the total turnover of such sales does not exceed this general threshold, then Belgian VAT applies to them. As a result, Belgian companies will have to pay foreign VAT much sooner than is currently the case.
By way of simplification, the new regulation does offer the possibility of paying the VAT due on these sales in the other EU Member States by means of one centralised quarterly VAT declaration, the so-called One Stop Shop (OSS). Under this regime, Belgian companies will be able to remit foreign VAT via an OSS declaration that can be submitted via the Belgian Intervat portal. The Belgian State will in turn pass on the foreign VAT to the relevant EU Member States. Precise instructions on how to successfully complete this registration via Intervat can be found on the website of the Belgian VAT administration (in FR and in NL).
New rules for B2C imports of goods (from 1 July 2021)
In addition to the new regime for distance selling within the EU, the rules for importing goods in the context of distance selling will be significantly changed as well.
The current VAT exemption for the import of goods from outside the EU with a value of up to €22 will be abolished from 1 July 2021.
To limit the VAT formalities here, a special scheme will be introduced for distance sales of imported goods with a maximum value of €150. For these sales, it will be possible to pay the VAT through the so-called Import One Stop Shop (IOSS). This will exempt the import of the goods from VAT and allow the VAT on distance sales of the imported goods to be paid via a centralised IOSS declaration. Unlike the OSS declaration for EU distance sales, which has to be submitted on a quarterly basis, the IOSS declaration will have to be submitted on a monthly basis. However, the principle will be the same: via the Belgian Intervat portal, the foreign VAT on all distance sales of imported goods can be remitted via one centralised declaration, regardless of the Member State in which the goods were imported.
If the imported goods are not sold via the seller's own webshop, but via an online marketplace (for example via amazon or bol.com) and the goods have a value of no more than €150, the VAT on these sales will in principle be collected and paid by the online marketplace.
Action points for Belgian businesses
Although the new VAT rules will only apply from 1 July 2021, companies that are already making distance sales or plan to do so in the near future should assess the impact of the new e-commerce VAT rules on their activities.
Belgian companies performing distance sales to other EU Member States, and who have stayed below the different thresholds up until now, will suddenly be confronted with the obligation to pay foreign VAT from 1 July 2021 (unless the total turnover of distance sales remains below €10,000). It is therefore in the interest of these companies to register for the One Stop Shop, which has been possible now since 1 April 2021.
Since other VAT rates apply in the EU Member States, the pricing on the website should also be looked at more closely.
A switch to the OSS regime could also be advantageous for Belgian companies making distance sales to other EU Member States, which are currently already paying VAT in those Member States. After all, it may be possible to deregister a number of foreign VAT registration numbers, which could mean a reduction in VAT compliance costs.
The following action points should be considered:
- Mapping all distance sales and the impact of the new rules on them (e.g. which VAT rates will have to be applied from 1 July 2021 and the consequences of this for reporting and invoicing).
- Preparing adjustments to the internal systems, as well as adjustments to the online webshop.
- Looking back at the reporting obligations under the current scheme: in anticipation of the new scheme, the VAT administrations in the various Member States are increasing their focus on e-commerce businesses that have made distance sales to their Member State. If it appears that the threshold has already been exceeded in that Member State without charging and remitting local VAT, the administration concerned will charge the VAT due, together with penalties and interest. By means of a spontaneous regularisation, the impact in this respect can usually be limited.
- Belgian companies that also sell goods that come from outside the EU can further investigate whether the new IOSS regime could be an administrative simplification. If it concerns goods with a maximum value of €150, then this assessment should also take into account the new rules for online marketplaces.
If you would like any further information, then please do not hesitate to contact your contact person at Tiberghien or one of the members of the Tiberghien VAT team.