vat rules for ecommerce

European Union: New VAT rules for e-Commerce

These VAT rule changes for e-Commerce will mean the seller will charge and collect the VAT at the point of sale to EU customers and declare and pay that VAT to the Member State of identification in the OSS. These goods will then benefit from a VAT exemption upon importation, allowing a fast release at customs.

The key changes to VAT rules for e-Commerce from July 1st include:

The extension of the scope of the MOSS, turning it into a One Stop Shop (OSS) to:

  • B2C supplies of services other than telecommunication, broadcasting and electronic services (“TBE” services)
  • Intra-EU distance sales of goods
  • Distance sales of goods imported from third countries and third territories under EUR 150, and
  • Changes to VAT rules on Marketplace obligations for cross border and domestic supplies.

The EU Commission reports that building on the success of the MOSS for TBE services, this concept will be extended and turned into a OSS:

  • The non-Union scheme for supplies of TBE services by taxable persons not established in the EU will be extended to all types of cross-border services to final consumers in the EU;
  • The Union scheme for intra-EU supplies of TBE services will be extended to all types of B2C services as well as to intra-EU distance sales of goods and certain domestic supplies facilitated by electronic interfaces. The extension to intra-EU distance sales of goods goes hand in hand with the abolition of the current distance sales threshold (which will be replaced by an EU wide annual turnover threshold of EUR 10,000 of sales to all Member States);
  • An import scheme will be created covering distance sales of goods imported from third countries or territories to customers in the EU up to a value of EUR 150.

With this rule change, the seller will charge and collect the VAT at the point of sale to EU customers and declare and pay that VAT to the Member State of identification in the OSS. These goods will then benefit from a VAT exemption upon importation, allowing a fast release at customs.

The introduction of the import scheme goes hand in hand with the abolition of the current VAT exemption for goods in small consignment of a value of up to EUR 22.

Where the import OSS is not used, a second simplification mechanism will be available for imports. Import VAT will be collected from customers by the customs declarant (e.g. postal operator, courier firm, customs agents) which will pay it to the customs authorities via a monthly payment.

For further detail on these VAT changes for e-Commerce see the links below:

The following “Notice to Stakeholders” has been provided by the European Commission.

The European Commission has also issued the following explanatory notice, for further information.