On 1 July 2021, all 27 European Union countries rolled out new e-commerce VAT schemes. Their introduction in addition to the UK’s recent changes to the rules regarding overseas goods sold to customers in the UK, means businesses across the world need to implement new systems.
Get yourself familiarized with how the new EU VAT schemes affect your business operations and compliance obligations in both the EU and your home-country.
A single registration in all EU Member StatesOnline sellers, including online marketplaces or platforms can register in one EU Member State and this is 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.
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New EU-wide threshold of EUR 10 000The previous thresholds for distance sales of goods within the EU have been abolished and replaced by a new EU-wide threshold of EUR 10 000. Below the 10 000 EUR threshold, 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. |
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Online marketplaces become deeded suppliersOnline marketplaces or platforms facilitating supplies of goods are, in certain circumstances, deemed for VAT purposes to have received and supplied the goods themselves (“deemed supplier”). |
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End of low value relief consignmentsThe VAT exemption at importation of small consignments of a value up to EUR 22 is removed. This means all goods imported in the EU are subject to VAT. Excise goods are not exempt from VAT. The excise goods such as alcohol and tobacco are not eligible for OSS nor IOSS |
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New record keeping requirementsIn addition, there are new record keeping requirements for online marketplaces/platforms that facilitate supplies of goods and services, including where such online marketplaces/platform are not a deemed supplier. |
E-commerce sellersAll e-commerce sellers from inside the EU and outside the EU, selling goods valued at below 150 EUR are affected.
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MarketplacesOnline marketplaces that facilitate sales inside and outside the EU (such as Amazon, AliExpress, Ebay, Etsy) will be affected as well. |
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EU customersEU consumers will have to pay VAT for every on-line purchase made from outside the EU. In some cases they have to pay VAT and customs clearance fee to a postal operator. |
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Post office operatorsPostal operators and couriers will need to follow a new procedure for checking the VAT compliance of consignments, and in some cases, collect VAT for a consignment. |
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Sellers had to register and file VAT in each of the EU country (up to 27) when their sales exceeds the threshold
EU businesses could not compete with non-EU businesses selling goods from 3rd countries can make VAT-free supplies into the EU
Consumers buying goods from outside the EU did not need to pay VAT on online purchases below 22 EUR
OSS enables some sellers to report all their pan-EU distance sales on a single VAT return in just one EU country instead of having multiple VAT registrations across the EU. Sellers can declare and pay the VAT in a single electronic quarterly return.
For sales from a warehouse or fulfillment center in another country, a foreign VAT registration will still be required
OSS came into effect 1 July 2021
The threshold of 10 000 EUR will apply for all EU countries combined
OSS is not compulsory but recommended
Reporting the OSS VAT returns and payments is required on quarterly basis
All business-to-consumer (B2C) sales of goods and services within the EU
Distance sales of goods into the EU
OSS can be used by both the EU and non-EU sellers
A seller must register with at least a single EU member state to file an OSS return for their business-to-consumer (B2C) sales of goods within the EU