Dutch suppliers – Enhanced checks on VAT status of customers recommended

When the Dutch entrepreneur receives a purchase order from a customer, they order the same product from a non-EU established merchant (Merchant) via an online platform operated by a non-EU entrepreneur (Platform operator). The product is shipped from outside the EU to the EU end-customer.  The Platform operator use the IOSS in the Netherlands to account for the VAT.    

One of the conditions for using the IOSS scheme is that the supply from the online platform constitutes a distance sale of goods i.e. that the goods are supplied to a non-business customer.

According to the Dutch tax authorities, the platform operator is facilitating a sale between the Merchant and the Dutch entrepreneur. Therefore, this supply does not qualify as a distance sale of goods. The platform operator argued that they could treat the buyer of the products as private individual unless they have information to the contrary in accordance with the relevant EU regulation.

For the Dutch tax authorities, the Platform operator must determine the VAT status of customers in accordance with all relevant facts and circumstances, only relying on the fact that a customer did not provide a VAT id number is not sufficient. In the case at hand, goods were shipped to different addresses and the orders were placed using specific business software.

Key takeaway

The approach of the Dutch tax authorities shows that platforms may have an obligation to perform additional checks regarding the VAT status of their customers. If suppliers have evidence or other information at their disposal that is indicative of the VAT status of their customers, they must review this information. The VAT treatment applied by a supplier cannot be solely based on whether the customer provides a VAT id number or not.