B2C Cross-border seller outside of EU

Companies which are established outside the EU and who carry out cross-border sales to private customers (consumers) located in the EU are, as a starting point, expected to charge local VAT in the country where the customer is located for all goods supplied (also low value goods). However, in some cases import VAT is not due by the company, but by the customer (through the carrier of the goods).

To achieve that local VAT is due, a set of complicated rules will be put in place. The way VAT is levied depends on the place of your warehouse, the value of the goods supplied, the place where the goods are imported, who is importing, the way the VAT is reported (one-stop-shop or not) and whether or not a platform is involved in the supply.

What can PwC do for you?

We can assist you in the full end-to-end process, from identifying the exact impact of the legislation changes on your business model to assisting and implementing these changes in your ERP systems, including meeting the new and far-reaching administrative requirements for data retention.

How does it work?

When for instance a US company delivers a parcel to a Dutch private customer, Dutch VAT will be due with regard to that parcel. The company may choose to report and pay this VAT itself to the Dutch tax authorities using the import One-Stop-Shop (i-OSS) system for low value goods (with a value of 150 Euro or less). At the moment the i-OSS system is used, the import itself is exempt from VAT if case specific conditions are met. However, if you also supply goods with a higher value, a different logic applies.

In case the i-OSS is used, the ERP system of the company needs to be prepared to be able to charge local VAT in the country where the customer is located and report it in the right way. That means information such as the VAT rates for all countries where B2C customers are located need to be gathered and maintained in the master data of the system. Furthermore, logic needs to be implemented to determine the location of the goods, the location of the customer and the right VAT treatment of differently valued goods. And additional tax codes are required as well for all countries where B2C customers are located. In addition to this, specific logic might be required to facilitate the automatic determination of the correct tax code.