EU Changes to VAT for B2C E-commerce

What changes in July?

  • The distance selling thresholds for the sale of goods have been removed. An EU-wide threshold of 10,000 EUR has been set.
  • New One Stop Shop (OSS) to extend the Mini One Stop Shop (MOSS).
  • Online marketplaces are considered the seller for collecting and reporting VAT for goods sold.
  • Low-value goods will no longer be exempt from import VAT. Every non-EU consignment entering the EU is subject to import VAT, resulting in the new IOSS
  • New record-keeping requirements for transactions made by online marketplaces supplying of goods and services.
  • Special arrangements will apply to imported goods valued less than €150, if the new IOSS isn’t used.
Why are the VAT rules for e-commerce changing?

Reduced administrative burden on sellers and governments

  • One set VAT threshold of EUR 10,000 rather than varied thresholds in each Member State. OSS enables sellers to register for VAT in one EU Member State only, and report VAT on all EU sales together.

Increased revenue for the EU.

  • VAT revenues are expected to increase by EUR 7 billion annually, as a result of the abolished low-value consignment relief.

Less fraud and equal competition

  • Increased fairness for EU businesses competing with non-EU businesses in the EU market.
Who is affected?

Are you a supplier of goods or services to EU consumers? If you’re involved in business-to-consumer (B2C) transactions or the e-commerce supply chain, including marketplaces, postal operators, couriers or customs and tax agents, these changes will apply to you.

  • Distance sellers, who sell products throughout the EU, or sell goods to the EU from a third country through their website or online marketplace. 
  • Individual sellers and online marketplaces who sell goods within or outside of the EU, such as Amazon, Ebay, Etsy etc.
  • Postal Operators and couriers will check that goods can be cleared from customs. On some occasions, they will need to collect VAT for all consignments.
  • EU Consumers now have to pay VAT on any products ordered online from outside of the EU. On most occasions this will be paid straight to the postal service or courier.

What is IOSS regime?

IOSS “import one-stop shop” is a new voluntary system for reporting and collecting VAT on B2C sales of low-value goods imported from non-EU countries. Suppliers and online marketplaces selling imported goods to EU buyers can use IOSS to collect, declare and remit VAT to the tax authorities, instead of making the buyer pay the VAT at the point of importation.

IOSS will:

  • Simplify customs clearance and import procedures for “low-value goods”. 
  • Increase transparency for customers
  • Reduce administrative burdens with one registration for all sales. 
  • Increase the speed of goods being cleared through customs.
  • Simplify logistics, as goods can be imported into the EU via any EU Member State regardless of their final destination.

How to apply?

 

  • IOSS registrations opened on April 1st for all EU member states.
  • If you are seller not based in the EU, you will need to appoint an EU intermediary to meet the seller’s VAT obligations under OSS.

What is OSS regime?

Mini One Stop Shop will be extended to the new One-Stop-Shop (OSS) for goods and services. This is an electronic portal which can be used by businesses to fulfil their VAT duties on e-commerce sales to consumers within the EU. This will enable online sellers and electronic interfaces inside the EU to:

  • Electronically register for VAT in a single Member State for all distance sales of goods throughout the EU and for business-to-consumer service supplies.
  • Payment and declaration of VAT duties on goods and services can be made in one centralised declaration (in an electronic quarterly return)
  • Liaise with only the local Tax Authority, in your registered EU Member State, regardless of whether they are involved in cross-border

How to register for OSS?

  • From 1 April 2021 onwards, businesses can register in every EU Member State. Every Member State has an OSS. 

Who can register for OSS?

  • For online sellers and electronic interfaces located outside of the EU, choose a Member State to register yourself. Typically this would be in the country you ship goods to consumers.