The European Commission has published guidance to help businesses prepare for the new EU-wide VAT e-commerce rules that come into force on 1 July 2021. From that date, the VAT rules on cross-border business-to-consumer (B2C) e-commerce activities will change. The rationale for the changes is to overcome the barriers to cross-border online sales and address challenges arising from the VAT regimes for distance sales of goods and for the importation of low-value consignments. The changes also apply to sales by non-EU suppliers to EU consumers and therefore UK businesses with EU consumer customers will need to prepare for the changes.
The main changes are the following:
a new ‘one-stop shop’ (OSS) which will allow businesses to register in one EU member state and deal with their VAT on distance sales of goods and cross-border supplies of services in that member state via a single quarterly VAT return;
the place of supply rules will be simplified, with a new EU-wide threshold of €10,000, below which distance sales/cross-border supplies will remain subject to VAT in the member state of the supplier;
above the €10,000 threshold, VAT will be paid where ‘consumption’ of the goods or services takes place (ie in the place of the customer);
new deemed supplier rules will apply for online marketplaces, which will be deemed for VAT purposes to have received and supplied the goods themselves;
VAT exemption for low-value consignments will be removed, meaning that all imports of goods into the EU will be subject to VAT; and
an ‘import one-stop shop’ (IOSS) will simplify declaration and payment of VAT for distance sales of goods with a value of up to €150.
The European Commission has published guidance to help businesses prepare for the new EU-wide VAT e-commerce rules that come into force on 1 July 2021. From that date, the VAT rules on cross-border business-to-consumer (B2C) e-commerce activities will change. The rationale for the changes is to overcome the barriers to cross-border online sales and address challenges arising from the VAT regimes for distance sales of goods and for the importation of low-value consignments. The changes also apply to sales by non-EU suppliers to EU consumers and therefore UK businesses with EU consumer customers will need to prepare for the changes.
The main changes are the following:
a new ‘one-stop shop’ (OSS) which will allow businesses to register in one EU member state and deal with their VAT on distance sales of goods and cross-border supplies of services in that member state via a single quarterly VAT return;
the place of supply rules will be simplified, with a new EU-wide threshold of €10,000, below which distance sales/cross-border supplies will remain subject to VAT in the member state of the supplier;
above the €10,000 threshold, VAT will be paid where ‘consumption’ of the goods or services takes place (ie in the place of the customer);
new deemed supplier rules will apply for online marketplaces, which will be deemed for VAT purposes to have received and supplied the goods themselves;
VAT exemption for low-value consignments will be removed, meaning that all imports of goods into the EU will be subject to VAT; and
an ‘import one-stop shop’ (IOSS) will simplify declaration and payment of VAT for distance sales of goods with a value of up to €150.
