Businesses that sell goods to consumers via an online store likely have experienced situations where the customer returns or rejects the goods because they were defective or damaged, the wrong goods were delivered, etc. When goods are returned for a full or partial credit or refund, the supplier must adjust the VAT on the transaction by replacing the invoice or issuing a credit, as appropriate. In addition to the time and expense of dealing with the returned goods, the supplier should be aware of any potential VAT obligations arising on the return of the goods and it may be possible to reclaim VAT.
Three situations are relevant in this context: domestic sales within the Netherlands, sales from the Netherlands to other EU member states and sales of goods to a Dutch consumer from outside the EU.
Domestic sales within the Netherlands
A business that sells goods and delivers them to private consumers in the Netherlands from a warehouse in the Netherlands must account for Dutch VAT. If the customer returns the goods, the business can reclaim the VAT paid.
Sales from the Netherlands to customers in EU member states
A business that sells goods to private consumers in other EU member states and transports or ships the goods or is otherwise involved in the transport will have to pay VAT in the country where the customer resides. An exception to this rule applies to entrepreneurs with one branch in the EU (and no branches or main establishment outside the EU) and turnover of no more than EUR 10,000 in EU distance sales and/or the provision of telecommunications, broadcasting and electronic services to private consumers in a member state other than the supplier; in this case, VAT is due in the country of departure of the goods.
Sales from goods outside the EU
Goods sold by a business from outside the EU to a private consumer in the EU must be imported, so the business will have to address both VAT and customs rules. The VAT treatment of these sales and returns depends on whether the Import One Stop Shop (or I-OSS) is used.
Information in our update
For more information about the VAT implications of returned goods, see our update in which we elaborate on these three scenarios.
In addition, we answer questions such as:
- How should a return be processed in the VAT return?
- Should a transfer of own goods still be declared?
- What are the VAT consequences of shipping and/or handling costs charged on a return?
- Does an import VAT exemption expire when goods are sold using the import regime/IOSS?
- Can import VAT be reclaimed and what are the conditions for making a claim?
Advice?
We would be happy to assist you in identifying your options and obligations. Please contact one of our VAT advisors.