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EU e-Commerce changes July 2021: Online Marketplaces to collect VAT

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Starting July 2021 online marketplaces that facilitate cross-border B2C transactions may be required to collect and account for VAT on these sales as deemed supplier of the goods. In this case, VAT can be collected directly from the buyer at the moment of sale and Online MarketPlaces (OMP’s) report and pay this VAT in the new online system, the One-Stop Shop (OSS) & the Import One Stop Shop (IOSS).

 

What is the definition of an online marketplace (OMP)?

According to the EU council, the term considered is an ‘electronic interface’ (EI). This is a broad concept and can include a website, portal, gateway, marketplace, platform, application program interface (API), etc.

 

What are the obligations of EI’s

Starting July 1st Online marketplaces may become deemed suppliers which will require them to collect and remit VAT for their sales and they will also have record-keeping obligations

 

When are you considered to be a deemed supplier?

You are considered a deemed supplier if you facilitate:

Distance sales of goods imported to the EU with a value not exceeding EUR 150; and/or Supplies of goods to customers in the EU, irrespective of their value, when the underlying supplier/seller is not established in the EU (both domestic supplies and distance sales within the EU are covered).

 

When you are not a deemed supplier?

  • Goods in consignments whose value is exceeding EUR 150 imported into the EU, irrespective of where the actual supplier/seller is established;
  • Goods supplied to customers in the EU, irrespective of their value, in case the underlying supplier/seller is established in the EU.

What are the record-keeping obligations for Online Marketplaces?

Online marketplaces will need to keep records for the transactions they facilitate, irrespective if they become deemed suppliers or not. Duration for these records is at least 10 years and are to be made available electronically on request by EU Member States.

 

What is the special arrangements scheme?

A special arrangements scheme will also be introduced according to which OMP’s can opt-out from their obligations of collecting and remitting VAT tax on behalf of the sellers. In this case, VAT collections is passed on to the courier and postal services. The special arrangements were introduced as an alternative simplification for the collection of import VAT in cases where neither the import scheme (IOSS) nor the standard VAT collection mechanism on importation are being used. Similar to the import scheme, use of the special arrangements is not mandatory.

 

All Online Marketplaces should prepare early and register for VAT in the EU in order to fulfill all of their VAT obligations.

 

GVC can help you with an all-inclusive approach in VAT compliance so you can focus on growing your business.

 

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