The new EU VAT e-commerce package – Implications for distance sellers

31 March 2021

From 1 July 2021, the European Union’s (EU) e-commerce reform will be introduced, which will include the withdrawal of the current VAT distance selling regime.

The current regime allows businesses that sell goods to consumers (B2C) from one EU country, to charge the VAT rate of the country of dispatch until defined sales thresholds are exceeded. Once these thresholds are met in the country where the goods are delivered (typically €35,000 or €100,000), you (the seller) will have to register in that country and start charging the VAT rate of that country.

When the new VAT e-commerce package is introduced, the current thresholds will be replaced by a €10,000 EU wide sales threshold applicable to sellers established in the EU and a zero threshold for non-EU sellers.

To reduce the administrative burden and costs for sellers potentially required to VAT register in all 27 EU countries, the EU will introduce an the option to report all cross-border B2C distance sales in the form of a One-Stop-Shop (OSS) VAT return.

One-Stop-Shop

The OSS is an electronic portal that allows you to declare and remit VAT on most EU wide B2C sales. The OSS will not take away the requirement for businesses to charge VAT in each EU member state, however, it will allow you to register in only one EU member state to report and pay the VAT on these transactions on a quarterly basis. 

Note: The OSS may be used for B2C distance sales and the provision of specific services only. The services include admission, transport, accommodation and some land-related services. Domestic sales and transfers of inventory between different member states still require local VAT registrations. 

Registering for the One-Stop-Shop

Registrations for the OSS are opening from April 2021 and if you’re a seller established:

  • In an EU Member State – You can apply for the OSS in the country where you’re established.
  • In a non-EU country – You can register in an EU member state from where you dispatch your goods and will possibly require a Fiscal representative to represent you in the country of registration.

Extended responsibilities for Online Marketplaces (OMP)

In line with the introduction of the OSS, all OMP’s such as Amazon and eBay will become liable for collecting VAT on certain sales of goods facilitated through their website. This will include all domestic and distance sales made by non-EU sellers, and will force the OMP into charging and accounting for the VAT on these types of transactions. The non-EU seller will then have a requirement to report the sale to the OMP in a domestic VAT return in the country where the goods were sold.

The new VAT e-commerce package will introduce a variety of changes for e-commerce sellers and these rules will require businesses to change the way that they trade and account for VAT in the EU. 

If you’re affected and require help to either understand or implement these changes, please get in touch with Fiscal Solutions to find out more about we can help.

Are you trading globally? Whether you require basic VAT advice or specific VAT compliance support, Fiscal Solutions can help. Our team of multi-lingual experts are knowledgeable in all the different VAT rules in Europe and around the world.

We help you simplify today’s complexities and address tomorrow’s challenges. The values we represent, and our consistent advice, mean you can trust Fiscal Solutions to do the right thing – for you and your organisation.

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