Starting a dropshipping business: who is the seller and which VAT applies?
Written by Ilias Aarrass7 min read · Published on · Last reviewed on 
In short
In dropshipping you are the seller and your whole sales amount is revenue; above € 10,000 to EU consumers VAT runs through the OSS, and up to € 150 from outside the EU through the IOSS.
- Under the Import scheme you charge your customer's country's VAT at the sale and file a return every month.
- Above € 150 the ordinary import rules apply, with import VAT and customs duties, and as importer you need an EORI number.
- If the parcel leaves from another EU country it is a chain transaction and the € 10,000 threshold generally does not apply.
- An invoice from a supplier outside the EU contains no Dutch VAT, so there is nothing to deduct on it.
Dropshipping sounds like the easiest way to start a web shop: you sell, your supplier ships the product directly to your customer, and you store nothing yourself. Commercially that is true; for tax it is different. For VAT and income tax you are the seller, with everything that entails. Which VAT you charge depends mainly on where the parcel leaves from and where it arrives, and that is exactly where many new dropshippers go wrong. This article explains who sells what, which VAT route goes with which supplier and how to set up your records per order.
You are the seller, not your supplier
Your customer orders in your web shop, at your price and under your terms. For them you are the point of contact for delivery, warranty and returns, including the fourteen-day right of withdrawal that consumers have for online purchases. How to process such returns is explained in booking web shop returns and refunds. Your supplier in turn sells to you. So there are two sales: supplier to you, and you to the customer.
That determines your bookkeeping. Your revenue is the full sales amount the customer pays, not just your margin. Your supplier's invoice is your purchase. If you sell via a platform, the same applies: the full sales amount is revenue and the commission is a cost, see selling via platforms. There is an exception for consignments from outside the EU up to € 150 sold via a platform; the platform may then count as the seller for VAT. For the general setup of web shop records, see bookkeeping for e-commerce.
VAT: it depends on where the parcel comes from
If your supplier ships from the Netherlands, it is straightforward. To Dutch customers you charge 21% or 9% VAT, depending on the product. To consumers in other EU countries you charge Dutch VAT as long as your total cross-border sales to EU consumers, together with any digital services, stay below € 10,000 a year. Above that you charge the rate of your customer's country and declare that VAT through the OSS portal, see VAT on digital services and OSS.
If the parcel leaves from another EU country, for instance a German warehouse, it gets more complicated. It is then a chain transaction, and the € 10,000 threshold generally does not apply if the goods do not leave from the country where you are established. Depending on how transport is arranged, the VAT of the country of arrival may be due from the very first sale, or you may even need a VAT registration in the country of dispatch. Have that route assessed per supplier before you start selling.
| Route of the parcel | Which VAT | Where you declare it |
|---|---|---|
| Netherlands to customer in the Netherlands | Dutch VAT, 21% or 9% | Regular VAT return |
| Netherlands to consumer in another EU country | Below € 10,000 a year Dutch VAT, above it the customer's country's VAT | Regular return or quarterly OSS return |
| Other EU country to customer in the EU | Chain transaction, often VAT of the country of arrival | Have it assessed per supplier |
| Outside the EU, consignment up to € 150 | With IOSS the customer's country's VAT at the sale | Monthly IOSS return |
| Outside the EU, consignment above € 150 | Import VAT and customs duties on import | Import declaration, depending on who is the importer |
Suppliers outside the EU: IOSS and import
Many dropshippers buy from suppliers in China or other countries outside the EU. Without a special scheme your customer is then formally the importer: on delivery they have to pay VAT and clearance fees, and some of those customers refuse the parcel. With the Import One Stop Shop (IOSS) you charge the VAT of your customer's country at the time of sale, and a consignment worth up to € 150 passes customs without VAT being levied. As a business established in the Netherlands you register for IOSS with the tax authorities and file a return every month.
For consignments above € 150 the ordinary import rules apply, with import VAT and customs duties. If you become the importer, you need an EORI number and you can reclaim the import VAT as input tax; how that works is explained in importing from outside the EU. An invoice from a Chinese supplier contains no Dutch VAT itself, so there is nothing to deduct on it. Also think about product safety: as the seller you are responsible to your customer if a product does not meet European requirements.
Records per order
Because you hold no stock, your records revolve around orders. For each order, record: the order number, your customer's country, the sales price, the VAT rate applied, the matching purchase invoice from your supplier and the proof of shipment or tracking code. That way you can show for every sale why you charged a particular rate, and your OSS or IOSS return matches your revenue. Link purchase invoices to orders; a supplier sending one collective invoice per month must still list order numbers.
Do not forget the costs around the sale. Advertising with Google and Meta usually comes from an Irish company, with reverse-charged VAT that you must declare yourself, see VAT on invoices from Google and Meta. Your web shop platform and payment provider also send invoices that belong in your records. Always calculate your margin per order excluding VAT; the VAT your customer pays is never yours.
Worked example: one order to a customer in the Netherlands
- Sales price including 21% VAT
- € 48.40
- VAT you pay over
- € 8.40, so revenue is € 40.00
- Supplier invoice excluding VAT
- € 22.00 (VAT € 4.62 reclaimable)
- Payment provider fee
- € 0.90
- Advertising costs allocated to this order
- € 6.00
Result: Daan keeps € 40.00 minus € 22.00 minus € 0.90 minus € 6.00 on this order, or € 11.10. Anyone who calculates their margin on the amount including VAT thinks they earn over € 8 more than is really left.
Frequently asked questions
Do I need a VAT number for dropshipping?
Yes. You sell goods and are therefore an entrepreneur for VAT. After registering with the Chamber of Commerce you receive a VAT ID and a turnover tax number from the tax authorities.
Do I need to keep stock records if I hold no stock?
You then usually do not need a stock count, but you do need complete order records. If on 31 December you have already paid for goods still in transit and not yet sold, discuss with your bookkeeper how to process them.
Can I deduct VAT on my Chinese supplier's invoice?
No, that invoice contains no Dutch VAT. You can only reclaim VAT on import if the import declaration is in your business's name and you paid the import VAT or declared it in your VAT return under a Dutch article 23 licence.
What if my customer returns goods to the supplier?
Towards your customer you issue a credit note and correct the VAT, including in your OSS or IOSS return if applicable. Your supplier in turn credits you. Record those two movements separately, because they do not always fall in the same period.
Sources
- Distance sales within the EU and the € 10,000 thresholdBelastingdienst · belastingdienst.nl
- The Import scheme (IOSS) for consignments up to € 150Belastingdienst · belastingdienst.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
