Processing VAT codes for international sales orders.

From July 1, 2021, it is mandatory to pay VAT to the individual countries to which deliveries are made when the total turnover of sales orders exceeds 10,000 euros outside the Netherlands. The VAT payment still goes through the Dutch tax authorities, but the specification must be made separately for each country. This applies not only to webshop orders, but also to sales orders that originate in the store and need to be delivered.

This document describes the solution that RetailVista ERP has to comply with this fiscal obligation as effectively as possible.

There are two possible solutions to this problem. The first involves assigning the correct VAT rate when creating the sales order. If it is a webshop order, the correct VAT rate should be determined when importing the webshop order.

The disadvantage of this solution is that a specific VAT rate must exist for each webshop product for each country in article maintenance. This requires a lot of effort. The purchasing organization may be able to provide VAT for some of the products, but there is still work to be done for the locally imported product assortment. Another major disadvantage of this approach is that the legislation only applies to sales orders to be delivered. If a sales order is converted from delivery to pickup (or vice versa), the VAT must be recalculated.After all, a takeaway order receives NL VAT while a delivery order receives the VAT of the respective country. If a customer decides afterwards that they would rather have a sales order delivered or picked up, this requires a reassessment of the VAT. If the reservation has already been paid (and the revenue has been generated), the VAT rate is no longer mutable because the sale is already in the revenue history and cannot be adjusted anymore. The order would then have to be credited and a new order would have to be created.

The second solution consists of retrospectively creating an Excel report of all sales orders, after which it can be calculated what the payment should have been per country. The statement is that foreign customers buy from a Dutch store and therefore always pay in euros and receive the NL VAT rate. Then, a report can be made every month of the revenue of all sales order lines, specifying the VAT rate and the fiscal country per line. With that Excel sheet, the revenue can be converted to the VAT rate of the fiscal country by filtering per fiscal country and NL VAT rate code.

To the extent that a VAT rate of the fiscal country of the sales order is available for an article, this rate will also be mentioned in this report. This way, it is possible to obtain a fairly accurate report afterwards. It is even possible to add the VAT rate afterwards to an article where it is missing and recreate the report.

After analyzing the documentation, NedFox has decided to support the second solution. In the RetailVista autumn 2021 update, a new report 208 has become available to create this specification.

For RetailVista sales order users, it is very important to ensure that the fiscal country is properly maintained on a sales order and reservation. A customer who wants to change the delivery of a specific sales order or reservation, whether or not in combination with another address, should result in correct recording of the fiscal country! This can also be corrected afterwards when creating the tax return report, but it forms the basis for a correct report! 

From the webshop producer, we expect a delivery address for a sales order. Based on the country of the delivery address, RetailVista determines the fiscal country. If an order is picked up, the delivery address should be omitted from the order message. This concerns the 'Delivery' section. If the delivery address is sent and it is a foreign address, RetailVista will assign the country of that delivery address as the fiscal country, which will ultimately result in an incorrect tax payment report. An alternative solution is for the webshop to include the fiscal country, then the webshop has control over that data and RetailVista will not calculate it anymore. However, the webshop producer must take into account whether it is a delivery or pickup order. NedFox's advice is to leave the determination of the fiscal country to RetailVista and to ensure correct delivery (or not delivering) of the delivery address.

To be able to check the fiscal country in the report, it can be useful to also include the chosen transport method as a column. Our support desk can add that to this report if desired. After all, the legislation seems to suggest that VAT payment only applies to shipping/delivery, not to picking up goods in the Netherlands itself. By adding the transport description to the report, it is clear whether the fiscal country matches the transport method.

No rights can be derived from this document, consult your accountant, tax advisor or financial advisor to determine the best way of working for your situation.