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European Union: EU – New e-commerce VAT rules take effect on 1 July

The EU Taxation and Customs Union announced that new VAT rules on cross-border business-to-consumer (B2C) e-commerce transactions will enter into effect on 1 July.  The following is from the announcement:

Everyone in the e-commerce supply chain is affected, from online sellers and marketplaces/platforms both inside and outside the EU, to postal operators and couriers, customs and tax administrations, right through to consumers.

Online sellers, including online marketplaces/platformscan register in one EU Member State and this will be valid for the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to customers within the EU.

They will benefit from a reduction in red tape of up to 95% by registering with the new One Stop Shop (OSS).

The existing thresholdsfor distance sales of goods within the EU will be abolished and replaced by a new EU-wide threshold of EUR 10 000. Below this EUR 10 000 threshold, the supplies of TBE (telecommunications, broadcasting and electronic) services and distance sales of goods within the EU may remain subject to VAT in the Member State where the taxable person is established.

Special provisions are introduced whereby online marketplaces/platforms facilitating supplies of goods are deemed for VAT purposes to have received and supplied the goods themselves (deemed supplier).

In addition, new record keeping requirements are introduced for online marketplaces/platforms facilitating supplies of goods and services, including where such online marketplaces/platform are not a deemed supplier.

The VAT exemption at importation of small consignments of a value up to EUR 22 will be removed. This means all goods imported in the EU will now be subject to VAT.

But help is at hand! A new special scheme for distance sales of low goods imported from third territories or third countries will be created. The Import One Stop Shop (IOSS) has been created to simplify the declaration and payment of VAT.  

Finally, simplification measures for distance sales of imported goods in consignments not exceeding EUR 150 will be introduced, in case the IOSS is not used (special arrangements).

  • Distance sales of goods within the EU carried out by suppliers or deemed suppliers;
  • Domestic sales of goods by deemed suppliers;
  • Supplies of services by EU and non-EU sellers to consumers in the EU;
  • Distance sales of goods imported from third territories or third countries carried out by suppliers and deemed suppliers, except for goods subject to excise duties.

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