What has changed in the EU e-commerce system since July 1,2021?

Who is affected by the changes?

Why the EU VAT system needed changes?

What are benefits for sellers or customers?

The overview of the EU VAT schemes 

How does OSS work?

Facts about OSS

To whom does OSS apply to?

Facts about IOSS

How does IOSS work?

When does a business need an intermediary?

What has changed since July 1, 2021?

	A single registration  in all EU Member States Online 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.
	New EU-wide threshold of EUR 10 000 The 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.
	Online marketplaces become deeded suppliers Online 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”).
	End of low value relief consignments The 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
	New record keeping requirements In 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.

Who is affected by the changes?

	E-commerce sellers All e-commerce sellers from inside the EU and outside the EU, selling goods  valued at below 150 EUR are affected.
	Marketplaces Online marketplaces that facilitate sales inside and outside the EU (such as Amazon, AliExpress, Ebay, Etsy) will be affected as well.
	EU customers EU 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.
	Post office operators Postal 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.

Why the EU VAT system needed changes?

B2C sellers burdened with administrative obligations

Sellers had to register and file VAT in each of the EU country (up to 27) when their sales exceeds the threshold

Structural undervaluation and disadvantage to EU sellers

EU businesses could not compete with non-EU businesses selling goods from 3rd countries can make VAT-free supplies into the EU

EU member states lose their tax-revenue

Consumers buying goods from outside the EU did not need to pay VAT on online purchases below 22 EUR

How do changes benefit sellers ?

Reduction in cross-border VAT compliance costs and overheads

• as sales across all 27 EU member states can be reported with just a single VAT registration
• VAT registration only required in countries where goods are stored/shipped from

EU businesses will be able to compete on equal footing with non-EU businesses that are not charging VAT

Transparent and accurate pricing at check-out

More efficient delivery time as consignments will be subject to an expedited customs process

The overview of the new EU VAT schemes

How does OSS work?

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

Facts about OSS

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

OSS applies to:

All business-to-consumer (B2C) sales of goods and services within the EU

Distance sales of goods into the EU

Who can use OSS?

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

How does IOSS work?

IOSS is a new scheme for reporting sales of goods imported from outside the EU into the EU and valued at less than 150 EUR. Under the IOSS, the importer can charge customers with VAT at the point of sale then declare and pay the VAT via a monthly IOSS return.

IOSS allows suppliers and electronic interfaces selling imported goods to buyers in the EU to collect, declare and pay the VAT to the tax authorities, instead of making the buyer pay the VAT at the moment the goods are imported into the EU as it was previously the case (for products over 22 EUR).

Facts about IOSS

• IOSS came into effect 1 July 2021.
• The 22 EUR VAT exemption is removed.
• On all imported goods, VAT must be paid whether your business is enrolled to IOSS or not.
  IOSS is NOT compulsory but recommended.
• Reporting the IOSS VAT returns and payments is required on monthly basis.

IOSS applies to:

• Parcels shipped from a non-EU country to a consumer based in EU.
• Parcels valued at equal to, or below 150 EUR. IOSS applies to the value of the whole parcel, not an individual item.
• IOSS does not apply to goods subjected to excise duties such as alcohol or tobacco.

Who can use IOSS?

You can use IOSS if:

• You are an e-commerce seller based in EU and Norway.
• You are not an EU-based e-commerce seller but your business has an appointed intermediary to act on your behalf in the country of registration in the EU.

When does a business need an intermediary?

Since April 1st 2021, IOSS registrations are open and all EU-based businesses can register for the IOSS on the IOSS portal of any EU member state. For businesses outside the EU an IOSS intermediary will need to be appointed in order to register those businesses under IOSS. This intermediary can only be a company established in the EU.

This IOSS intermediary is acting on behalf of its clients in order to perform all VAT payments to the tax authorities. As such, the IOSS intermediary is jointly liable to the EU tax authorities regarding their clients VAT obligations. IOSS does not require the intermediary to take care of the suppliers customs declarations.

If your company is not located in the EU then you can only register to the IOSS through an IOSS intermediary. This Intermediary is also liable for any VAT owed by the seller.