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E-Commerce & B2C Services in Cyprus

The EU VAT legislation for cross-border B2C e-commerce transactions was revised on July 1, 2021. These changes aim to eliminate barriers to online cross-border sales and address challenges arising from VAT regulations for distance selling and the import of low-value goods.

Now, online sellers and marketplaces/platforms have the option to register for VAT in just one EU Member State, which then allows them to handle VAT declarations and payments for all their distance sales and cross-border services to consumers within the EU.

Learn all about ecommerce and supply of services in Cyprus in our comprehensive guide.

VAT Guide Cyprus

E-commerce in Cyprus

The OSS (One Stop Shop) scheme, while optional, offers numerous advantages to sellers operating in multiple EU member states, including:

  • Streamlined VAT Compliance: The OSS enables sellers to simplify their VAT obligations. Rather than registering for VAT in each member state where they sell, sellers can register in one EU member state and manage VAT for all EU sales via a single return.
  • Less Administrative Work: Sellers no longer need to appoint fiscal representatives in every member state where they have customers, reducing both administrative tasks and costs.
  • Enhanced Cash Flow: Simplifying VAT compliance and reducing administrative burdens can improve cash flow for sellers, helping them avoid penalties and interest charges related to non-compliance.
  • Boosted Competitiveness: The OSS levels the playing field, allowing EU sellers to compete more effectively against non-EU businesses that aren’t subject to the same VAT regulations.
  • Expanded Market Reach: With reduced administrative hurdles, it’s easier for sellers to target customers across the EU, potentially growing their market and increasing revenue.

For businesses involved in distance selling of goods imported from outside the EU, OSS registration is possible if the business is:

  • Based in an EU member state.
  • Represented by an intermediary in an EU member state.

Located in a non-EU country with a mutual assistance agreement akin to that within the EU.

Under the OSS, goods imported are exempt from import VAT. Businesses registered with OSS file quarterly electronic VAT returns to their designated member state, whereas those under the IOSS for imported goods file monthly. These filings and payments are securely distributed to the respective consumption member states.

In Cyprus, OSS-registered businesses are required to keep detailed electronic records of transactions and submit specialized VAT returns electronically to the tax authority. These records must be accessible to relevant authorities for 10 years after the transaction year.

For supplies under OSS, issuing invoices is not necessary. From July 1, 2021, suppliers of non-EU distance sales of goods valued at 150 euros or less have an alternative simplification option. This allows them to appoint an EU intermediary, like a courier or customs agent, to handle VAT compliance. The intermediary then collects and pays the import VAT to customs on behalf of customers monthly.

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B2C services in Cyprus

Business to Consumer Services and the One Stop Shop (OSS) Scheme.

 

The European Union has introduced the One Stop Shop (OSS) program to streamline the registration and reporting obligations for foreign e-commerce providers who offer goods and services in the EU market.

 

The One Stop Shop (OSS) replaces the previous Mini One Stop Shop (MOSS) scheme and is now applicable to cross-border transactions of telecommunication services, television and radio broadcasting services, and electronically supplied services (also known as TBE services) made to consumers. The main aim of the OSS is to simplify VAT reporting requirements for businesses engaged in cross-border Business-to-Consumer (B2C) transactions. The OSS was originally set to become operational from January 1, 2021, but due to the outbreak of the Coronavirus pandemic, the implementation was postponed.

 

The One Stop Shop (OSS) is a voluntary simplification measure that enables eligible taxable persons, both within and outside the European Union, who conduct cross-border business-to-consumer (B2C) transactions, to avoid registering in each Member State where the transaction takes place. This measure generally applies to three types of transactions:

 

  • B2C services supplied by taxable persons not established within the EU (the “non-Union One Stop Shop”).
  • B2C distance sales of goods and services supplied by taxable persons established within the EU but not in the Member State of consumption (the “Union One Stop Shop”).
  • Distance sales of goods from outside the EU with an intrinsic value not exceeding 150 euros (the “Import One Stop Shop” or IOSS).

 

The value of goods sold for export to the EU is determined by the intrinsic price of the goods, which does not include transportation, insurance costs, or any additional taxes and charges, unless these are included in the price and clearly indicated on the invoice. To use the OSS scheme, businesses within the EU must register in the Member State where their business is based, typically their main place of business or headquarters. While Non-EU businesses that have one or more fixed establishments in the EU may register in any Member State where they have a fixed establishment.

 

Non-EU businesses that do not have any fixed establishments in the EU can choose to register in any Member State they prefer. However, if the non-EU business employs an intermediary within the EU to conduct distance sales on their behalf, they must register in the Member State where the intermediary is located.

Business-to-Business (B2B) Services

Inbound B2B supplies and digital service supplies typically follow the same VAT treatment.

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New E-commerce rules in the EU

The OSS generally covers: 

 

  • B2C services provided by taxable persons based outside of the EU (the “non-Union One Stop Shop,”). 
  • B2C distance sales of goods and services provided by taxable persons based in the EU but not in the Member State of consumption (the “Union One Stop Shop”)
  • Distance sales of goods from outside the EU for less than 150 EUR (the “Import One Stop Shop,” or IOSS). 

An EU company must register and use the Union OSS Scheme in the Member State where it has its headquarters (generally, its principal place of business or head office). A non-EU company with one or more fixed establishments in the EU may register in any Member State where it has a fixed establishment. A non-EU business with no such fixed establishments can register in the Member State of its choice. However, suppose the non-EU business appoints an intermediary in the EU to carry out distance sales from outside his or her EU Member State on his or her behalf. In that case, they must register in the Member State where the intermediary is established.

 

The former EU-wide thresholds for distance sales of products have been eliminated, and a new EU-wide threshold of EUR 10,000 has been established. Supplies of TBE (telecommunications, broadcasting, and electronic) services and distance sales of products inside the EU may be liable to VAT in the Member State where the taxable person is based if the amount exceeds EUR 10,000.

 

 

Last Updated: 02/04/2024

Disclaimer

The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax

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