Distance selling in the European Union (EU) occurs when a supplier sells goods from one member state (e.g. the Netherlands) to a person who is not registered for VAT purposes (private individual) in another member state and the supplier is responsible for the delivery of the goods. It includes mail order sales, phone or telesales or physical goods ordered over the Internet.
Sales of goods ordered via the Internet but physically supplied are considered to be distance sales for VAT purposes.
Under the so-called distance selling arrangements, sales to customers in other EU member states who are not registered for VAT are liable to VAT in the member state of the supplier (e.g. the Netherlands) provided that the threshold appropriate to the member state of the end customer is not breached. Where sales exceed the threshold in any particular member state, the supplier must register and account for VAT in that member state.
A supplier who makes distance sales from the Netherlands to customers in other member states who are not registered for VAT, is liable to Dutch VAT at the applicable VAT rates on such sales until the value of the sales reaches the threshold applying in that other member state. Once the value of the supplier’s sales exceeds the threshold in the other member state, the supplier is obliged to register in that member state and account for VAT at the rates applicable there. If the appropriate threshold is not exceeded, the supplier may, nevertheless, opt to account for VAT in the member state to which the distance sales are made.
Under the EU VAT arrangements, member states were required to adopt a distance sales threshold of either Euro 35,000 or Euro 100,000. The particular member states have opted for these thresholds.
Again, please note that a supplier who is engaged in distance sales to several member states is required to register for VAT in each member state in which the value of the distance sales exceeds the appropriate threshold.
If a foreign supplier is obliged to register for VAT in another member state because the value of her distance sales to that member state exceeds the relevant threshold, the tax authorities of the member state(s) concerned should be contacted to provide details of the (formal) requirements for registration. For foreign (non-EU) entrepreneurs most often fiscal representation will be required in the member state of arrival.
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