Netherlands: Waiver of default penalties for non-compliance with OSS mechanisms of VAT e-commerce package

A waiver of default penalties until 1 June 2024 for taxpayers who are non-compliant with One Stop Shop mechanisms of EU VAT e-commerce package

Waiver of default penalties for non-compliance with OSS mechanisms of VAT e-commerce

Article Posted date 21 December 2023

The Dutch tax authority (on 20 October 2023) announced a waiver of default penalties until 1 June 2024 for (non-Dutch) taxpayers who are non-compliant with the One Stop Shop (OSS) mechanisms of the EU value added tax (VAT) e-commerce package, effective from 1 July 2021.

This announcement also includes a reversal of previously imposed payment default penalties. The announcement was further codified in a Decree (dated 13 November 2023).

Specifically, the reversal of previously imposed penalties involves refunds of any default penalties already paid and the closure of all outstanding disputes in favor of the taxpayers, except in cases when taxpayers deliberately or by gross negligence did not pay the full VAT due.

The waiver applies to all non-resident users of OSS mechanisms, irrespective of whether they are using the:

  • Union mechanism: Applies to businesses based in the EU for certain services and to businesses based outside the EU for cross-border supplies of goods within the EU
  • Non-union mechanism: Applies to businesses based outside the EU for certain services
  • Import mechanism: Applies to sellers of goods imported from outside the EU

The EU VAT e-commerce package [PDF 144 KB], implemented effective from 1 July 2021, requires both non-EU and EU providers to charge VAT on the sale of cross-border services and goods to consumers (B2C) in the country of destination. It also eliminates the low-value consignment relief and introduces simplification measures, most notably several OSS mechanisms that facilitate reporting and remitting all EU VAT due in one country. The OSS mechanisms simplify the process of declaring and paying VAT for businesses that sell goods or provide services across multiple EU countries.

Under this mechanism, instead of having to register and declare VAT in each individual EU country when they sell goods or services, businesses can choose to register in one EU Member State and declare and pay VAT for all their EU sales there.

KPMG observation

This decision was influenced by the current technical constraints and the ambiguity surrounding the rules applicable in several EU Member States. Consequently, the tax authority deemed it unfair to impose default penalties.  The decree does not clarify whether the regime applies to only non-residents who are registered for the OSS in the Netherlands as well. However, as the primary reason for waiving the penalties is the insufficient and/or incorrect information provided by foreign tax authorities, and the late arrival of this information in the Netherlands, it seems the waiver is intended only for OSS users registered in other EU countries.


For more information, contact a KPMG tax professional:

Philippe Stephanny | philippestephanny@kpmg.com

Chinedu Nwachukwu | chinedunwachukwu@kpmg.com

Max van de Ven | vandeVen.Max@kpmg.com

Werner Gelderblom | Gelderblom.Werner@kpmg.com

 

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