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.
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:
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.
Inbound B2B supplies and digital service supplies typically follow the same VAT treatment.
The OSS generally covers:
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
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