WCA eCommerce 1st Annual Conference Plenary Session 4 EU VAT changes in crossborder trade Speaker: Mr. J. (Jayant) Rakhan Partner and Global Leader - Indirect Tax Baker Tilly Berk NV

1. Plenary Session 4: EU VAT changes in cross border trade
Jayant Rakhan, Partner & Global Leader Indirect Tax, Baker Tilly Berk
Pieter Janssen, CCO, Janssen Air & Ocean, Netherlands and Belgium
1st ANNUAL
CONFERENCE
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2. • Proposition Baker Tilly Berk and Janssen Air & Ocean
• Global supply chains and indirect taxes
• Shipping goods into Europe
• Selling goods to EU customers
• E-commerce sales
• VAT Action Plan
• What do we do for our clients
Agenda

3. E-commerce in Europe
Proposition

4. • Globalization of supply chains
• Each time goods cross a border, these goods could be subject to an indirect tax and
the related compliance obligations, such as:
• Export licensing
• VAT/GST reporting and documentation (to support an exemption)
• Customs and excise duty reporting and compliance documentation
• Customs reporting and documentation
• Excise and customs duties on importation
• VAT/GST and other sales taxes on importation
• VAT/GST reporting and documentation (to support input tax recovery)
• Export compliance obligations
Global supply chains and indirect taxes

5. • VAT/GST now applies in more than 160 countries worldwide
• VAT/GST is globally the third important source of revenue for governments
Global supply chains and indirect taxes

6. • VAT/GST is a multi stage tax on consumption
Global supply chains and indirect taxes
Manufacturer Wholesaler Retailer Consumer
TAX AUTHORITIES
Invoice 80 + 20 VAT Invoice 100 + 25 VAT Invoice 120 plus 30 VAT
Pay 80 + 20 VAT Pay 120 + 30 VATPay 100 + 25 VAT
Pay 20 VAT Pay 30 VATPay 25 VAT
Reclaim 20 VAT Reclaim 25 VAT

7. • Supply of goods:
• The transfer of the right to dispose of a tangible property as owner
• When taxable event:
• Transfer of ownership
• Where subject to VAT: always follow the flow of the goods!
• Goods transported : VAT due in country where transport starts (see exceptions)
• Goods not transported : location moment of supply
• Exceptions : for example distance sales B2C, ICA, import
VAT system in general

8. B2B supply of goods, goods stay within one EU country
• Local VAT is due (general VAT rate)
• Reverse charge mechanism could be applicable for non-NL suppliers
B2B supply of goods, goods from one EU country to another EU country
• Intra-Community supply: VAT due in country of departure (0%-rate)
• Intra-Community acquisition: VAT due in country of arrival (local VAT rate)
VAT system in general

9. B2B supply of goods, goods from one EU country to non-EU country:
• Export: VAT due in country of departure (0%-rate)
• Import: import VAT might be due in country of arrival
B2B supply of goods, goods from non-EU country to EU country:
• Export: VAT might be due in country of departure
• Import: import VAT due in country of arrival (local VAT rate)
VAT system in general

10. Import of goods
Import VAT deferment license in the Netherlands:
• No actual payment of the import VAT instead: administrative control through VAT return!
• Business not established in the Netherlands: license through fiscal representative
• Cash flow advantage !!
• Fiscal representative takes care VAT compliance obligations
• The Netherlands often used as country of import in EU: gateway to Europe
VAT system in general

11. What you need to think about
Shipping goods into Europe
Import VAT
Fiscal rep VAT compliance
Duties classification
Fulfillment
Clearance costs
Single Set of Rules
but, 28 sets of
interpretation
Who is the importer
of record?

12. VAT compliance obligations for the seller of the goods
• Goods sold in EU or from EU: VAT compliance obligations!
• No legal entity required, also required for foreign businesses
• Types of VAT compliance obligations:
• Periodic VAT returns
• EU sales and purchasing reports
• Intrastat returns
• Annual VAT returns
Selling goods to EU customers

13. EU distance selling regulation:
• Sales are subject to VAT in suppliers’ country until threshold is exceeded
• If threshold is exceeded, sales are subject to VAT in consumers’ country
• Thresholds in most EU countries EUR 35,000
• Also applies when selling through a market place like Amazon!
• Market place is not responsible for collecting / paying VAT on behalf of seller!
E-commerce Sales

14. Once threshold exceeded in an EU country, some challenges:
• local VAT registration required
• local VAT compliance obligations
• application correct local VAT rate
• local requirements applicable on invoices
E-commerce Sales

15. E-commerce Sales
https://youtu.be/Qnuo9NfcDMU

16. VAT Action Plan
“Our activities will go under
the radar, the tax authorities
will not find us”
“We only sell to private individuals in EU countries and
we are established in another part of the world, we do
not have anything to do with VAT in Europe.”
• Failure to register could result in significant penalties and interest on
late payments!
• Specialist within tax authorities are actively pursuing e-tailers and
approaching Amazon, etc. for seller sales data!

17. VAT Gap
• VAT revenue collection has failed to show significant improvement across EU
Member States
• Difference between expected VAT revenue and the collected VAT over
EUR 150 billion
• Due to fraud, evasion and tax avoidance
VAT Action Plan

18. European Commission published VAT Action Plan
• Remove, harmonize and simplify VAT related obstacles to E-commerce
• Purpose:
• Modernize the VAT system for cross-border E-commerce & reduce administrative burden
arising from different VAT regimes
• Action to support E-commerce by for example:
• Remove the import VAT exemption for small shipments of goods
• Extending the One Stop Shop for all cross-border E-commerce
VAT Action Plan

19. • Before the start of doing business in the EU:
• obtain advice re supply chain from VAT/customs perspective, VAT compliance
obligations, etc.
• Structure / optimize business model
• Structure / optimize adminstrative processes
• Put in place operating procedures that will enable maximisation of refunds, cash
flow advantages and avoidance of penalties and interest
Conclusion

20. • International VAT and customs structuring
• Coordination of multiple-country project (within Baker Tilly International)
• EU VAT compliance
• Advice and structuring E-commerce goods (webshops)
• Fiscal representation
• EU VAT trainings, VAT scans & webinars
What we do for our clients

21. About the speaker
Jayant Rakhan
Partner & Global Leader Indirect Tax
T. : +31 6 12 02 41 49
E. : j.rakhan@bakertillyberk.nl

22. About the speaker
Pieter Janssen
CCO, Janssen Air & Ocean
The Netherlands and Belgium
T. : +31 6 48 012 489
E. : p.janssen@jao1877.com

23. THANK YOU!
1st ANNUAL
CONFERENCE
HYATT REGENCY MIAMI