THE EU VAT REFORMS FOR E-COMMERCE

06/07/2021

A new VAT e-commerce package has been introduced by the EU and new rules have been effective as of July 1, 2021. The purpose of the EU VAT changes is to promote cross-border trade in online sales by complying with obligations, preventing tax fraud, and creating fair competition. The Commission proposed EU legislation in two stages. 

The European Commission aims at simplifying VAT obligations for companies carrying out cross-border sales of goods or services to final consumers and to ensure that VAT on such supplies is paid correctly to the Member State in which the supply takes place, in line with the principle of taxation in the Member State of destination.

The Commission proposed EU legislation in this area in two stages. The first measures entered into force in 2015 and covered telecommunications, broadcasting, and electronic services to consumers. The second package of measures was adopted by the Council in December 2017 and extended the simplification to distance sales of goods as well as to any type of cross-border service supplied to final customers taking place in the EU. The latter measures, also referred to as ‘the VAT e-commerce package’ apply from 1 July 2021.[1]

 

What are the new changes?

As of July 1, 2021, the following changes will involve the below matters:

• Improvements of the current Mini One Stop Shop (MOSS)
• Special provisions applicable to supplies of goods facilitated by electronic interfaces
• Extension of the scope of the MOSS, turning it into a One Stop Shop (OSS), to:
  • B2C supplies of services other than telecommunications, broadcasting, and electronic (TBE) services
  • Intra-EU distance sales of goods
  • Certain domestic supplies of goods facilitated by electronic interfaces
  • Distance sales of goods imported from third territories and third countries in consignments of an intrinsic value of a maximum EUR 150

Who is affected by the new rules?

The new changes in VAT e-commerce will affect all B2C sales within the EU and outside the EU. Distance sellers within the EU or trading with the EU will need to reconsider their VAT requirements.

 

For more information, please see the link below:

https://ec.europa.eu/taxation_customs/business/vat/modernising-vat-cross-border-ecommerce