The Netherlands: eCommerce after Brexit

For the Dutch but also the EU entrepreneur who conducts transactions with other entrepreneurs in the United Kingdom, Brexit means that the VAT consequences with regard to the transactions with the United Kingdom have changed from 1 January 2021. Since 1 January 2021, the United Kingdom is no longer an EU Member State but it is treated as a third country. This means that the European VAT rules no longer apply to transactions with the United Kingdom. Northern Ireland is an exception to this.

From 1 January 2021, an export declaration must be made in the Netherlands for goods delivery from the Netherlands to the United Kingdom and an import declaration in the United Kingdom.

If Dutch entrepreneurs do not want to burden their customers in the United Kingdom with these extra administrative obligations and want to take care of the import formalities in the United Kingdom for the customer then they have to apply for a VAT number in the United Kingdom and will pay VAT on import into the United Kingdom and then charge English VAT. Import VAT in the United Kingdom can be declared in the VAT return in the United Kingdom from 1 January 2021, and therefore no longer has to be declared immediately upon import.

For an import of goods into the United Kingdom, VAT treatment in the United Kingdom is different depending on whether the value of the consignment is more or less than GBP 135:

Value less than GBP 135

UK VAT is payable on the sale and therefore not on import if the UK buyer provides a valid UK VAT number to the Dutch supplier. Not the Dutch supplier, but the British customer must pay the VAT via the reverse charge mechanism on his VAT return. The Dutch supplier:

• Is not required to register for VAT in the United Kingdom to the extent that the reverse charge mechanism applies;
• Invoices without VAT, but with the mention “reverse charge: customer to account for VAT to HMRC” from his Dutch VAT number to the British company;
• Must submit an export declaration or have it submitted in the Netherlands in which he acts as “exporter”;
• Must file an import declaration in the UK if acting as “importer of record”;
• Apply for a GB EORI number from the UK customs authorities.

Value Over than GBP 135

UK VAT is payable on import. Who is responsible for VAT and customs clearance in the UK depends on who arranges the import. In case the Dutch supplier arranges the import, the Dutch supplier must:

• Commits to register for VAT in the UK;
• Pays UK VAT on import. This can be done via ‘Postponed VAT Accounting’ by including the VAT and reclaiming it in the British periodic declaration with regard to the period in which the tax became due and payable;
• Bill the UK VAT on the local delivery from its UK VAT number to the UK customer;
• Must submit an export declaration or have it submitted in the Netherlands in which he acts as “exporter”;
• Must file an import declaration in the UK if acting as “importer of record”;
• Apply for a GB EORI number from the UK customs authorities.

Sale to the UK – B2C

When goods are sold to consumers, they are exported and 0% VAT is payable in the Netherlands, to be stated in question 3a in the VAT return. The goods are exported in the Netherlands and the goods are imported into the United Kingdom. For parcels from the EU to the United Kingdom with a value of up to GBP 135, there is an online portal in which the VAT amount due in the United Kingdom can be declared and paid. Packages with a value of GBP 135 or more will be subject to VAT from the recipients in the UK. Sellers must apply for a VAT identification number for the sale and shipment of packages worth up to GBP 135 to UK individuals (Northern Irish excluded) so that they can declare UK VAT. Arrange this quickly,

The above shows that the VAT treatment in the UK is different depending on the value of the consignment but also with the involvement of an online marketplace.

Value less than GBP 135

The Dutch supplier invoices and pays UK VAT at the time of sale. So no VAT is payable on import. In such a case, there is a direct supply from the Dutch supplier to the British consumer, which is deemed to take place in the United Kingdom and will therefore be subject to British VAT, with the result that the Dutch supplier.

Source Credit: Carola van Vilsteren