How we assisted a client with its distance sales in the EU

The client’s problem

Our US based client sells online consumer products via a Dutch BV-company to private individual consumers throughout the European Union. The sales of the client can be considered as distance sales for VAT. To the extent client exceeded certain thresholds in the countries of the consumers, the Dutch BV company has to register for VAT purposes in the country (or countries) of the consumers. Client should then file a local VAT return and has to pay VAT in the country of the consumer rather than the Netherlands.

It appeared that the client exceeded the thresholds in France and Belgium, although it declared and paid only Dutch VAT on its sales to the French and Belgian consumers so far.

Our solution

We requested our TGS Global member firms in France and Belgium to apply for a French and Belgian VAT number for our client. Secondly, we asked them to take care of submitting the local VAT return. As we have access to all sales data, we could provide our fellow TGS Global member firms with the relevant data. This way client only had to deal with us as their permanent point of contact.

In order to avoid that the client pays both Dutch VAT and French or Belgian VAT on distance sales to France and Belgium respectively, we excluded these sales from the turnover that is taxable in The Netherlands.

Current situation

The Dutch company has been registered in France and Belgium now. Moreover, the first Belgian VAT return was submitted and paid. Business is growing rapidly, so client is about to exceed the next threshold in the following country.

PS The rules for distance sales will change in the Netherlands on 1 July 2021.

_Note: due to the privacy of our clients, this case study provided by TGS lime tree does not include any names, numbers and other sensitive information of our clients, partners and other parties involved. _