My experiences with Dutch VAT law

[mhoutermans]

Dear OSC community,

 

I am preparing a shop for my company and to make sure that I charge the right taxes I contacted the Dutch Tax department (I know that was a mistake :D ). But any way I thought that I would share the result of this with the OSC community as my tax account manager made some statements that are good to know for everybody.

 

First let me explain my shop and then give a copy of the letter that my tax account manager send me. The shop will be located in the Netherlands and I will sell products that originate from the Netherlands, countries within the EU and outside of the EU. As I am global I will sell to any country in the world.

 

My shop will sell software tools, books, and reports. In most cases I would assume that only businesses by these tools as I don?t think they are of interest to private persons. In that case my shop would be a B2B shop. But since I also sell books it might be that a private person buys a book and in that case it would also be B2C shop. The reason I am telling this is because it complicates the way VAT is charged. Next is a literal translated copy of the letter I received from the tax account manager:

 

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Dear ?.

 

After our conversation on Monday 18 juni, I promised to send you the most important rules concerning VAT and your Internet shop. Further I will explain the transfer of software and the term ?service? in relation to VAT.

 

I will begin with the term ?service?. The transfer of software, without carrier (i.e, CD or Disk), thus software that will be downloaded by a client, is considered concerning VAT as a service. The place of the service is then determined by article 6-2-d-3e Law VAT 1968. In case the client is a company or a private person outside of the EU: the place of service is where the client is located. Incase the client is a private person within the EU: the place of service is the Netherlands.

 

We noted that most of your clients would be companies. This means that transaction to these clients, in the case of downloading software files, must be taxed in the country where the company is located. Thus when invoicing the VAT of that country is applicable. Often the VAT can be reversed by the so-called VAT reverse rule. You invoice with VAT reversed, the client has to pay the VAT and deducts the same VAT as pre-tax.

 

The transfer of standard software and similar, where a carried is used, is considered by the VAT tax as a delivery of goods. This delivery is taxed where the delivery starts. In our case there are to options. The goods come from outside the EU or from inside the EU.

 

Incase goods come from outside the EU, they will have to be imported somewhere in the EU. During import VAT will be charged. In case the goods are imported in the Netherlands and it is clear, that next the goods, ?intracommunautair? [DID NOT KNOW HOW TO TRANSLATE THAT] will be delivered to a receiver in another EU country, the import VAT rate will be 0%. Next delivery will take place according to 0% ?intracommunautair? to the receiver who in his country receives ?intracommunautair?. Your invoice to the receiver will state 0% VAT with the VAT id number of the receiver. Next this transaction will be listed to Deventer [particular TAX department in the Netherlands]. In case you cannot prove the 0%-rate you should apply 19% Dutch VAT. In the described situation you import.

 

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As you can see this is quite interesting. The VAT rules in the Netherlands are determined by the route of the product. All of this gets more and more complex depending on whether you send a package or transfer digital, whether you send it to a privat person or a company. It makes it not easy for me to run OSC with all these options.

I wonder if other people could share there findings and may be on solutions that they created.