EU VAT Changes 2021: E-Commerce

2021 is a year of big change for VAT in the EU.

On 1 July 2021, the VAT e-commerce package was introduced.

The rules relating to e-commerce activities have changed. These changes will directly impact all businesses in the supply chain, such as individual sellers and marketplaces. Distance sellers within the EU, or trading with the EU, will need to redefine their VAT requirements from July 2021.

Some of the main changes that are taking place are:

• The expansion of the Mini One Stop Shop (MOSS)
• The launch of the One Stop Shop (OSS)
• The introduction of the new IOSS
  • This will facilitate and simplify VAT declaration and VAT payments for the sale of goods online in the EU with a value not exceeding €150
  • IOSS will allow non-EU registered e-commerce marketplaces to declare and pay their VAT in the EU
  • To register for IOSS, non-EU businesses need to appoint an intermediary that is established in the EU to assist them
• A unified distance selling threshold is set to €10,000

With the OSS and IOSS now live, an important aspect to be considered is the invoicing rules that are applicable by a deemed supplier in relation to the distance sales of goods imported from third territories or third countries of an intrinsic value not exceeding EUR 150 under art.14a(1), Directive 2006/112/EC; or a B2C supply of goods taking place within the EU by a non-EU established business under art.14a(2) of the same EU Directive.

The invoicing obligations for deemed B2C supplies are as follows:

• Deemed B2C supplies of imported goods taking place in the EU (art.14a (1)):

For these supplies, if using the scheme, the invoicing rules of the Member State of identification apply. If not using the scheme, the invoicing rules of the Member State where the distance sale of the imported goods takes place apply.

• Deemed B2C supplies of goods within the EU (art.14a (2)):

Where a domestic supply is made by the Electronic Interface (EI), the invoicing rules of the Member State of identification apply. In the case of intra EU distance sale of goods made by the EI, the invoicing rules of the Member State of identification apply, if using the scheme; if not using the scheme, the invoicing rules of the member state where the distance sale of the imported goods takes place apply.