Pause on e-commerce VAT reporting fine ends Jan 2025 following 2021 EU reforms
The Dutch government has announced that administrative fines for non-payment or late payment of VAT on e-commerce transactions will resume starting 1 January 2025, marking a return to stricter enforcement under the EU’s 2021 e-commerce VAT reforms.
Read more in our Dutch VAT guide.
2021 E-Commerce Reforms and Temporary Fine Waiver
The 2021 e-commerce reforms introduced the One Stop Shop (OSS), a streamlined VAT reporting system aimed at simplifying compliance for businesses selling goods and services across the EU. However, during the initial implementation period from 1 July 2021 to 31 December 2024, the Dutch government waived administrative fines for non-compliance.
This decision was made in response to several challenges:
- Uncertainty in the new rules: Businesses struggled to navigate the complexities of the OSS system.
- Startup issues among EU tax authorities: Other Member States faced delays and operational hurdles, affecting cross-border coordination.
- Resource constraints: The Dutch tax authorities experienced shortages in personnel and capacity, compounded by high costs associated with processing taxpayer appeals.
Transition Back to Fines in 2025
The waiver, while necessary during the transitional phase, was always intended to be temporary. The State Secretary for Finance explained that the circumstances which justified the fine waiver have significantly improved or become manageable over time.
On 29 July 2024, the State Secretary confirmed that fines for OSS VAT non-payment or late payment will remain suspended until 1 January 2025. A Decree was issued retroactively effective from 1 June 2024, ensuring that any penalties imposed during that interim period would also be waived.
From 1 January 2025, businesses will need to ensure strict compliance with VAT obligations under the OSS system to avoid penalties.
Reinforcing the Impact of the 2021 Reforms
The return of administrative fines underscores the Netherlands’ commitment to enforcing the harmonized VAT rules introduced under the EU’s 2021 e-commerce package. These reforms aimed to close VAT gaps, reduce fraud, and simplify cross-border trade within the EU. With clearer guidelines, improved administrative capacity, and stabilized systems, the Dutch government is ready to resume stricter enforcement of VAT compliance for e-commerce businesses operating through the OSS framework.
This development serves as a reminder to businesses to review their VAT reporting practices and ensure readiness for the resumed enforcement in 2025.
