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As you know better than anyone, not all online sellers are the same. The services and goods you sell vary. The markets you operate in are different.
But everyone can benefit from the changes to e-commerce VAT rules designed to simplify your VAT obligations. Get prepared for the important changes.
What has changed since 1 July 2021 and how does it affect you?
There are two main areas of change for online sellers that you should be aware of:
New EU-wide threshold
The existing thresholds for distance sales of goods to buyers in other EU Member States (EUR 35 000 or 100 000, depending on the Member State) has been abolished and replaced by a new EU-widethreshold of EUR 10 000.
Below this threshold, you can continue to apply the domestic rules for VAT (including the SME exemption scheme) on your cross-border sales. If your sales are above this threshold, you are liable for VAT in the Member State where your buyers are located. But you can easily register in the One Stop Shop (OSS) – where you can declare and pay the VAT due in other Member States.
End to VAT exemption on importation
The VAT exemption for the importation of goods of a value not exceeding EUR 22 has been removed. As a result, all goods imported to the EU are now subject to VAT.
The Import One-Stop Shop (IOSS) was created to facilitate and simplify the declaration and payment of VAT for distance sales of goods imported to the EU with a value not exceeding EUR 150. If you register for the IOSS, your customers will appreciate that the price they pay represents the final price, VAT included, with no hidden charges or fees.
If you do not register for the IOSS, VAT will be paid by your customer upon importation of goods in the EU. Postal operators or couriers may charge the customer an additional clearance fee to collect this VAT and complete the necessary formalities upon importation of goods.
As EU customers are used to prices including VAT, the payment of additional fees at the time of importation might lead to the customer refusing the package in question.
Both OSS and IOSS are ready to use since 1 July 2021.
Is your business affected by these changes?
If so, see our dedicated pages to learn more about what the OSS and IOSS tools are for, how they work, who is affected, how to register with them and what you need to do when you start using them.
Why change the rules?
These new rules will:
- Ensure that VAT is paid where consumption of goods and services takes place;
- Create a uniform and transparent VAT system for cross-border supplies of goods and services;
- Re-establish fair competition between European and foreign e-commerce market players, as well as between e-commerce and traditional shops;
- Offer businesses a simple and uniform system to declare and pay their VAT in the EU via the VAT One Stop Shop/Import One Stop Shop.
Need more information?
OSS factsheet for online sellers
IOSS factsheet for online sellers
Check out the Resources page.