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Make use of the One Stop Shop to avoid having to register VAT per country

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Make use of the One Stop Shop to avoid having to register VAT per country 

As of 1 July 2021, the rules for distance selling (B2C) changed. The foreign VAT will have to be charged by the entrepreneur to the consumer according to the VAT rules of the country where the consumer is located. Instead of reporting in every EU country where the consumer is located, it is now possible for the supplier to make use of the One Stop Shop (OSS) scheme. The supplier needs to register in a single EU country and can use this opportunity to account for VAT in all EU countries where the consumers are located. This is a major advantage as it significantly reduces administration costs.

There are three variants of the OSS available: 1. The Union scheme 2. The non-Union scheme and 3. The Import Scheme (IOSS) for distance sales under €150. As an entrepreneur outside the EU, it is also possible to make use of the OSS. In principle, the choice of country is free, but if the company has a permanent establishment in the EU, the OSS must be applied for in the country in which the permanent establishment is located. For the non-EU entrepreneur, it may be more advantageous not to register for the OSS if the entrepreneur expects to incur costs on which foreign VAT is charged to him.

The services that qualify for the OSS are: digital services, services that are taxed based on the legislation of the country of the consumers and services that take place in that country. Examples are intra-community distance sales (sales to consumers where the goods are sent from one EU Member State to another) and online services (such as subscription-based platforms).

For EU entrepreneurs, there is a cumulative threshold of €10,000 per year; one entrepreneur meets this threshold if, for example, €5,000 in digital services and €5,000 in intra-Community distance sales have been converted.

There is no threshold for non-EU entrepreneurs; they can always apply for the OSS. If, for example, sales are made from an EU country via a permanent establishment, the €10,000 threshold must again be met and may not be included in the non-EU company’s OSS declaration.

Would you like to make use of the OSS, then TaxAble can assist you! We can assist with amongst others:

  • Registration for the OSS with the Dutch tax authorities;
  • Making quarterly reports for the VAT;
  • Submitting the quarterly reports for the VAT;
  • Take over complete correspondence with the tax authorities.

Agreements Germany and Belgium home work days Covid-19

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Dutch tax agreements with Germany and Belgium for days working from home due to Covid-19

The main rule for salary taxation is that employees are taxed in the county were they work. Because of Covid-19 people are working way more from home and this can bring unwanted double taxation and a higher income tax burden. Think of situations were usually you traveled a lot and worked often in the country were you get your salary from, this income is taxed there.

But now due to Covid-19 you have not travelled that much and most of your income will be taxable in The Netherlands, while the other country may also want to have a claim on part of your income.

To cope with these problems, additional agreements have been made by The Netherlands with Germany (6th April 2020 – at least 31st of March 2021) and Belgium (30th of April 2020 – at least 31st of March 2021)  regarding working from home.

In both cases the countries have agreed that cross-border workers may treat days worked from home as days were they would have normally (pre Covid-19) worked across the border, these days may be taxed by the other country.

If you require assistance with preparing your personal income tax return, please feel free to contact us.

 

Solutions for Dutch import VAT due after Brexit

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Solutions for Dutch import VAT due after Brexit

The United Kingdom has left the European Union on January 1st 2021 (Brexit). This has consequences for, among other things, VAT.

When importing goods from outside the EU to the Netherlands, VAT is due on these goods immediately upon import. Although this VAT may later be reclaimed, this will lead to a cash flow problem for the UK company.

However, there is a possibility to only first report this import VAT when filing a VAT return. This is beneficial, because this import VAT can then be reclaimed as deductible input VAT in the same VAT return. On balance there is no VAT payable over the import.

To be able to make use of the above arrangement, you must be in the possession of what is known as an “Article 23 permit“. As a foreign entrepreneur, you cannot request for an Article 23 permit yourself. For this purpose you must have a tax representative (‘fiscaal vertegenwoordiger’) in the Netherlands or have a Dutch company which is a tax resident of the Netherlands (just setting up a Dutch B.V. is not enough).

The tax representative of the foreign entrepreneur is responsible for meeting the obligations regarding VAT (and therefore also liable for the financial risks). These obligations are the result of performing activities in the Netherlands which are subject to VAT. In practice, the tax representative relieves the entrepreneur of all administrative burdens that arise from these activities. This gives the entrepreneur the freedom of doing business. The conditions for a tax representative to be met are as follows:

  1. This tax representative must be established in the Netherlands;
  2. The tax representative must provide financial security for VAT (bank guarantees, etc.) towards the tax office.

As an alternative a Dutch B.V. can be incorporated which will take over and perform the UK company’s trading activities within the EU. In order to make use of the above mentioned article 23 permit, the factual management (or majority part thereof) of the Dutch B.V. should be located within The Netherlands.

Brexit has other consequences for VAT as well. For example reclaiming local VAT imposed within the EU, as of 2021 a UK company will have to make use of paper forms instead of the EU online refund procedure.

TaxAble is your one stop shop for tax, accountancy and legal when setting up a Dutch company. We have advised and assisted various UK companies with setting up a Dutch B.V. company. We also advised on the related VAT matters.

 

Lower compulsory salary for substantial shareholders in 2021

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In 2021, substantial shareholders may take out a lower compulsory salary (“gebruikelijk loon”) if there is a decrease in turnover of their company. The Dutch Tax Authorities have published a new formula for this purpose.

Substantial interest holders may use this formula without prior permission from the Dutch Tax Authorities to lower the compulsory salary. However several conditions apply before the salary may be lowered:

  1. The estimated turnover for the whole of 2021 will be compared to the actual turnover for the whole of 2019.
  2. An entry threshold applies: reduction of the customary wage is possible with a loss of turnover of at least 30% in 2021 compared to 2019.
  3. The salary may not be lowered retroactively.
  4. It is not allowed to take out Dividends and/or to take out funds through a current account loan due to the lowering of the salary.
  5. The turnover of both reference years 2019 and 2021 may not be influenced by incidental events (e.g. merger, acquisition, liquidation)

The formula is as follows:

Compulsory salary 2021= compulsory salary for 2019 * (the whole turnover(excluding VAT) of 2021 / the whole turnover(excluding VAT) of 2019)

Changes in Dutch real estate transfer tax as of 2021

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Changes in Dutch real estate transfer tax as of 2021

As per January 1st 2021, there are changes in the Dutch real estate transfer tax. If the buyer is between 18-34 years of age, on a one-off basis, no Dutch real estate transfer tax is due when purchasing a home where the buyer will live him- of herself as a main residence, meaning the aim to live there for a longer and majority period of time.

An additional rule to the above applies as of April 1st 2021: The purchase price of the house may not exceed an amount of € 400.000. In case the purchase price does exceed this amount, as of April 1st 2021, a 2% real estate transfer tax rate will apply on the full amount of the purchase price.

Finally, the Dutch real estate transfer tax rates have been adjusted. A buyer with the age of 35 or older, who buys a house in which he/she him/herself is going to live, the real estate transfer tax rate remains at 2%. However for the purchase of a residential house for investment, or commercial immovable property, an increased rate of 8% applies for the real estate transfer tax.

After purchasing a home as your main residence, you may request the tax office for a preliminary tax refund of mortgage interest deduction. We assist with requesting these preliminary tax refunds as well as with preparing the annual personal income tax returns over the year in which such property was bought.

Dutch real estate held by foreign residents, is subject to Dutch personal income tax. We assist various foreign residents with preparing their personal income tax returns. In addition we can directly handle all related correspondence with the tax Dutch office by serving as our clients’ correspondence address.

Dutch withholding tax on interest and royalties 2021

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As per January 1st 2021, a Dutch withholding tax on interest and royalties is introduced. As a result, interest and royalties paid by a Dutch withholding agent established in the Netherlands, to an affiliated entity established in a low-tax jurisdiction or in a normal jurisdiction where there is an abusive situation, will be taxed in the Netherlands.

A state is considered a low-tax jurisdiction if it applies a statutory rate of less than 9% for profit tax or if it is included in an EU list of non-cooperative jurisdictions for tax purposes in that period.

An abuse situation exists when an entity is entitled to the benefits for the primary purpose of avoiding the imposition of tax and there is an artificial arrangement or a set of transactions that can be considered artificial.

The withholding tax rate corresponds to the highest percentage in corporate tax: 25%.

The taxpayer is the beneficiary and the tax is levied on the benefits in the form of interest and royalties. The tax is levied by deduction from the benefits. The Dutch withholding agent withholds the tax at the time when the benefits are received.