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PRESENTER LAUREEN: Welcome to the webinar Taxes for my international online shop.
My name is Laureen and I will be your host. With me are entrepreneur Emma Hutchinson...
from ginfling.nl. Hi, good to have you here. EMMA: -Thank you.
Entrepreneur Sebastian Pollesello of capsulestudio.net. Hi.
And Johan Laffra and Sandra Wood of KVK, the Netherlands Chamber of Commerce.
LAUREEN: Thank you for being here today. JOHAN AND SANDRA: -You're welcome.
In this webinar we will update you on the various taxes you have to deal with as an online shop...
and what the rules are for import and export.
Maybe it's good to start with the beginning. So Johan, I'm going to start with you.
If you start an online shop in the Dutch market, which taxes do you have to deal with?
If you start your own business in the Netherlands, it's always the same taxes.
The VAT, it's income tax, and in certain cases it's also an excise duty, which has to do with alcohol.
Probably something Emma can tell you all about. But those are the most important.
As a business, at the end of the year, you need to do your income tax which is for everyone.
The tax office will charge a certain percentage you need to pay in taxes.
That's what happens. And on top of that, there's the VAT tax, done four times a year.
LAUREEN: How does it work? So four times a year, what is it?
Once you make the registration, you get two tax numbers.
The VAT number that you'll be using towards your clients and an ID number...
that you can use to declare your own line of VAT taxes. So every three months you log in...
and declare to the tax office the amount of VAT you received from clients...
minus the amount of VAT you paid for purchases on behalf of your business.
So once you make that calculation, you'll know what to enter...
and what you need to declare to the tax office. It's as simple as that.
LAUREEN: There are different rates, different percentages for the Dutch VAT.
LAUREEN: Which ones are there? -There are three.
For most businesses it's the 21%. The general tariff when it comes to VAT is 21%.
So you can find out on the tax office website. That could be handy.
All the exceptions to the rule are mentioned there.
If you have an activity... Maybe you're in food or drinks, or maybe in certain sectors...
you might be eligible for the lower VAT tariff, which is 9%.
If you go abroad, it could be 0% in VAT.
But those are exceptions, they're mentioned on the tax office website.
If you're not an exception, automatically you need to charge clients with the 21% in VAT.
LAUREEN: So there's some bookkeeping rules involved there.
Sebastian, as an entrepreneur, how do you keep track of your Dutch sales?
SEBASTIAN: It's a great question.
When we started out, we were really small. We had a small budget.
So we thought, let's do this ourselves. So we tried to keep track of everything in Excel.
Like mentioned here, you need to file your taxes four times per year.
And, of course we missed the deadline, so we got a little fine of 50 euros from the Tax Authority.
We thought, this isn't worth it, let's outsource this. So we found a good bookkeeper...
who's doing all the taxes and filings for us, also does our personal income tax...
so really has the whole picture of all VAT and tax questions for us.
So that would be an advice from your part? SEBASTIAN: -I would strongly recommend it.
It's a small amount to spend per month. You can deduct it from your taxes anyway.
I would really recommend anyone starting out to have a tax adviser from the start...
to make sure everything's filed correctly.
Even if your revenue is small in the beginning, it's still worth it to have a good record...
of everything you're spending and to make sure your taxes go out correctly.
LAUREEN: Okay, well thank you.
So, Johan, and Sebastian added on, those are the Dutch taxes, the Dutch VAT system.
So, Sandra, if we take a look abroad...
I'm going to ask you some hypothetical combinations of factors.
So there are different, let's start in general first, different rates for foreign sales.
LAUREEN: What rates do you use abroad?
It depends on whether you deliver goods to a private individual or a company.
That's a bit different.
Whether you file the Dutch VAT, or you file the foreign VAT or zero.
LAUREEN: Okay, so that... Let's start off then. Then we take private individuals.
So you sell, as a Dutch company, to private individuals abroad.
We also call that 'remote sales', maybe good to keep in mind.
LAUREEN: But within the EU, also very important, and your annual turnover...
is less than 10,000 euros. Do you have to file a declaration abroad?
In this case, of less than 10,000 euros, you can choose to file a tax return...
with the Dutch VAT, or you can choose to do it abroad, to the foreign VAT.
Mostly, it's better to do the VAT in the Netherlands. It's less complicated.
LAUREEN: Less complicated. Easier accessible, maybe.
So that's if it's less than 10,000 euros.
What if it's over 10,000 euros to a private individual in the total turnover?
If it's more than 10,000 euros, you have to ask for the tax return...
in the foreign country, the other country. You can do it for every country individually.
SANDRA: Or you can do it with the international One Stop Shop, also called OSS or O-S-S.
You can choose. Then you can do that in one go.
For example, you have individuals in Germany, Belgium.
You can do your tax return through the OSS in one time, for both countries.
LAUREEN: That sounds good. SANDRA: -It's good, but still a little complicated.
Still a little complicated.
So what should we take into account if you were to use that OSS for your foreign sales?
You have to register first at 'Mijn Belastingdienst', and then the part VAT.
With the registration you can try to do it yourself, the tax return.
SANDRA: But my advice would be to let it be done by a specialist. An accountant or bookkeeper.
Because it can be complicated. And once you miss something or do something wrong...
it can have a lot of consequences.
A small fine would be nothing. Especially because it's done abroad...
there might be other difficulties as well. SANDRA: Exactly. And the OSS system is new.
On July 1st of this year it started. So there are little things you're not used to working with.
LAUREEN: Exactly. -So there are specialists.
Not all accountants already know how it works, but a lot of them have had the training...
and they know how to do it. LAUREEN: -Okay, good. So good to keep in mind.
But of course you have various sources of income when you do international sales as well.
Various ways of getting that money into your account. Emma, I'm wondering...
for international sales, which platforms do you use or how do you have your money arranged?
EMMA: We have small international sales, but they are growing...
and we have plans to make them grow further. So we're using a payment provider platform...
that collects all the money on our behalf.
It also gives the customer flexibility into what payment method to use.
That could be a debit card, a credit card, it could be iDEAL or an equivalent internationally.
EMMA: Or it can be PayPal. So there's different ways that they can pay.
The payment provider reconciles all that.
And when the payment clearance is done, then we receive our money.
LAUREEN: And you know, because of your invoices, if it's a sale abroad with a credit card...
or if it's in the Netherlands or within the EU. EMMA: -Yes.
LAUREEN: Nice. Okay, finishing up that private buying part...
if we were to look at the entrepreneurs, if you sell to other entrepreneurs within the EU...
how does it work? Selling, as a Dutch company, to other entrepreneurs within the EU.
SANDRA: Basically you can charge the 0% VAT rate.
But then you need to do some things first.
To check whether the VAT number of your buyer is correct, if it's a company.
Because it's not always a company when they say it is, so you have to check the VAT number.
You can check this in the system of the European Union.
It's called the VIES system. It's a database where all VAT numbers of companies in the EU...
are based. LAUREEN: -Collected.
You can check it there. If you have a red answer, it's not in there. Or some other thing is wrong.
SANDRA: Maybe the VAT number doesn't match the company name, for example.
If it's green, you can use the VAT number.
Then you have to state the number on your invoice...
with the remark 'reverse VAT' to, and then you mention the VAT number.
SANDRA: So the tax office in the Netherlands also know that you refer...
the VAT to the other country.
LAUREEN: So that's something to keep in mind, to have that on your form, on your invoice.
Okay. So, what if you...
What about the rules if you import your goods from abroad?
LAUREEN: Will you have to deal with customs, for example. How does that work?
SANDRA: Import from abroad... You use the term 'import'...
if you're going to import from outside the EU into the Union.
So if you have import within the European Union, we don't use the term 'import'...
but we use 'intra-community transaction', also ICT.
If you say you're going to import abroad, then you mean a country outside of the EU.
In that case, you could be having to deal with import duties.
SANDRA: It depends on whether the country you import from...
has a free trade agreement with the European Union.
If they do and the goods suit the conditions to have the free trade agreement...
then you pay 0% VAT... zero import duty.
And just the VAT as is the rate in the Netherlands. If they don't have a free trade agreement...
then you have to pay the import duty. The import duty you pay over the custom value.
The custom value is the value of the goods, added to the insurance...
and, most of the time, the transport costs. Then you pay the import duty...
add it up, and then you pay the VAT. So if you make a calculation...
do it the right way, because if you do it the wrong way, you're going to miss some.
LAUREEN: Good to keep in mind. And there's this phenomenon called 'dropshipping'.
SANDRA: Oh, yes. Very popular. -What is it?
Well, it's... If you go... You've ordered something on a webshop in the Netherlands, for example...
but the owner of the online shop places the order, for example...
with the manufacturer in China, and asks him to send the goods directly to...
the purchaser, the individual it's sent to.
In that case you don't know the shipment goes from China to your house.
You think that the online shop will send it to you. That's called dropshipping.
So the manufacturer in China sends an invoice to the online shop to pay...
and they deliver it to you. What the difficulty is with that...
is that it's sounds easy for the online shop, because they don't have anything in stock.
SANDRA: But they can't be sure that the product suits the product safety.
Because in the European Union we have strict rules for product safety.
So it's a tricky way to do business. I always warn them.
Check first what kind of products you're going to import through dropshipping.
If it's toys, small machines, or electric consumer products, be careful.
SANDRA: Because they need a CE marking, special safety regulations...
for the European Union. If you miss that, and something goes wrong...
A few weeks ago there was a telephone charger, something went wrong...
and it caught on fire. If you can say: 'I bought it at that online shop and that happened...'
they're liable.
You're liable for the safety of that product. So they can sue you.
LAUREEN: The online shop is accountable...
SANDRA: Yes, because the customer doesn't know he purchased the goods in China.
He orders it at an online shop in the Netherlands. The rule in the EU says...
that if you're going to import a product outside the EU into the Union...
there's product liability. They see you as the manufacturer.
So if I want to sue you, I won't sue the manufacturer in China, but the online shop.
SANDRA: And you have to be aware if you like dropshipping. It can work for some products.
If there are products where the product safety... It's not really dangerous or anything.
LAUREEN: It also opens the door for counterfeits. SANDRA: -It does. And it's difficult to check.
Sometimes you can see it, most of the time through the price...
but it's not always like that. So you have to check it first.
So there's a lot of things that come in hand when you're watching international sales.
Yes. It's difficult, but it can be done. But you have to check first...
if it's a trustworthy partner you work with abroad.
You don't check that by doing business online with them. You have to get that trust from them.
Build a relationship. If there's something wrong with the product, you can check it with them.
The example we had with China... Most of the time the product says there's a CE on it.
So you say: 'Okay, I think the product is right.' But CE in China also stands for China Export.
Because you need a licence to export products outside of China.
They put a CE mark on it, saying it's a China Export product.
But it's something different from the CE mark for product safety in the European Union.
SANDRA: So beware of that. -Good to keep in mind.
Emma, you do international sales as well. You import as well. Or maybe within the EU...
so not calling it import, in that case. So how does that work?
A lot of our supply comes directly from the Netherlands.
But we do bring in from other European countries.
But we also have brought in from outside of the EU.
And we're fully aware that we are the importers into the EU and it comes with a responsibility.
So for us, yeah, we have to keep on top of the rules.
And alcohol, again, we have the pleasure of paying alcohol tax...
as well as the standard import taxes and obviously any, you know...
VATs that are due. LAUREEN: -Yeah. Good to keep in mind.
Maybe some final questions to wrap things up?
Sebastian, I was wondering, what would you do differently?
Would you do anything differently if you were to set up your online shop today?
Yeah, if we would start all over again, I think there's a few things we'd do differently.
We would invest a lot more and go a lot bigger from the start.
Of course, when you start out you can be scared and think: 'What if it fails?'
But to succeed you really need to go all in, I think, from the start.
And the second one is, I think we're quite good at it...
but to be even more customer-obsessed and to always put the customer first and to think...
how can we make the absolute best experience for every single customer.
That's the way to get them to come back.
To grow your business is to always put the customer first.
LAUREEN: Customer-obsessed. Nice expression. And Emma, for you?
EMMA: I think for us it would be easy to say that we'd change the product...
because it would be easier. But we are really enthusiastic about gin.
So for us, that is what we want to do. As Sebastian says:
You know, maybe you might not think it's going to work out. We're two years down the line.
We wish we had a bigger warehouse. That is because we've been successful.
There's always something to learn. One thing I wouldn't change is the partnership with Gary.
Because we balance each other really well. -I can imagine.
We've heard all about income taxes, VAT and what you need to be aware of...
if you do business abroad. It's important to familiarise yourself with the regulations...
and get advice from experts. Then you'll certainly have a successful start of your online shop.
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