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Cross-border VAT e-commerce has been modernised in the EU.
We are making life simpler and fairer for all.
The new rules came into force on 1 July 2021.
Who is concerned?
Everyone in the e-commerce supply chain is affected, from online sellers and marketplaces/platforms both inside and outside the EU, to postal operators and couriers, customs and tax administrations, right through to consumers.
Find out how!
What is changing?
Since1 July 2021, the VAT rules on cross-border business-to-consumer (B2C) e-commerce activities have changed. The rationale for these changes is to overcome the barriers to cross-border online sales and address challenges arising from the VAT regimes for distance sales of goods and for the importation of low value consignments.
The main changes are the following:
Online sellers, including online marketplaces/platforms can register in one EU Member State and this will be valid for the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to customers within the EU.
They will benefit from a reduction in red tape of up to 95% by registering with the new One Stop Shop (OSS).
The existing thresholds for distance sales of goods within the EU has been abolished and replaced by a new EU-wide threshold of EUR 10 000. Below this EUR 10 000 threshold, the supplies of TBE (telecommunications, broadcasting and electronic) services and distance sales of goods within the EU may remain subject to VAT in the Member State where the taxable person is established.
Special provisions are introduced whereby online marketplaces/platforms facilitating supplies of goods are deemed for VAT purposes to have received and supplied the goods themselves (“deemed supplier”).
In addition, new record keeping requirements are introduced for online marketplaces/platforms facilitating supplies of goods and services, including where such online marketplaces/platform are not a deemed supplier.
The VAT exemption at importation of small consignments of a value up to EUR 22 has been removed. This means all goods imported in the EU are now subject to VAT.
But help is at hand! A new special scheme for distance sales of low goods imported from third territories or third countries was created. The Import One Stop Shop (IOSS) has been created to simplify the declaration and payment of VAT.
Finally, simplification measures for distance sales of imported goods in consignments not exceeding EUR 150 are established, in case the IOSS is not used (special arrangements).
Which are the transactions covered by the new changes?
- Distance sales of goods within the EU carried out by suppliers or deemed suppliers;
- Domestic sales of goods by deemed suppliers;
- Supplies of services by EU and non-EU sellers to consumers in the EU;
- Distance sales of goods imported from third territories or third countries carried out by suppliers and deemed suppliers, except for goods subject to excise duties.
The benefits are wide and varied
- Consumers will appreciate knowing that when buying goods online from outside or inside the EU, the VAT rate applied is the same as for goods acquired in their home country - the new rules make sure that VAT is paid where consumption of goods takes place
- EU businesses will be able to grow in a simplified, fairer environment and overcome the barriers to cross-border online sales - the European Digital Single Market aims to make technology work for people in a fair and competitive digital economy;
- EU citizens will see public revenues increase - thanks to increased VAT payments and less VAT fraud, all Member States will benefit.