How the new VAT declaration model operates in Europa?
From the 1st of July, 2021.
Two special schemes have been introduced to allow taxable persons to declare and pay VAT due in Member States in which they are not established, via a web-portal located in the Member State in which they are identified:
The non-Union OSS scheme, which covers supplies of all types of cross-border services provided by taxable persons not established in the EU to final consumers in the EU
The Union OSS scheme, which covers all types of business to customer (B2C), supplies of services as well as intra-EU distance sales of goods, and certain domestic supplies facilitated by electronic interfaces
What is the Union OSS?
The Union One-Stop Shop (OSS) is the electronic portal businesses can use to comply with their VAT obligations on e-commerce sales within the EU to consumers since 1 July 2021.
What is the Union OSS for?
The Union OSS is an electronic portal which simplifies up to 95% of VAT obligations for online sellers and electronic interfaces throughout the EU, as it allows them to:
Register for VAT electronically in a single Member State for all intra-EU distance sales of goods and for business-to-consumer supplies of services;
Declare and pay VAT due on all supplies of goods and services in a single electronic quarterly return;
Work with the tax administration of their own Member State and in their own language, even if their sales are cross-border.
Who can use the Union OSS and for which supplies?
- A taxable person established in the EU (who is not a deemed supplier) can use the Union OSS for:
Supplies of B2C services taking place in a Member State in which he is not established;
Distance sales of goods within the EU.
- A taxable person not established in the EU for:
Distance sales of goods within the EU .
- An electronic interface (established in the EU or outside the EU) facilitating supplies of goods (deemed supplier) for:
Distance sales of goods within the EU ;
Certain domestic supplies of goods.
How to register for the OSS?
Each EU Member State has an online OSS portal where businesses can register since 1 April 2021 and can be used for transactions made on or after 1 July 2021
This single registration is valid for all eligible supplies made by online sellers (including electronic interfaces) or supplies facilitated by electronic interfaces.
There are two main areas of change for online sellers that you should be aware of:
New EU-wide threshold
The existing thresholds for distance sales of goods to buyers in other EU Member States (EUR 35 000 or 100 000, depending on the Member State) has been abolished and replaced by a new EU-wide threshold of EUR 10 000.
Below this threshold, you can continue to apply the domestic rules for VAT (including the SME exemption scheme) on your cross-border sales. If your sales are above this threshold, you are liable for VAT in the Member State where your buyers are located.
Content taken from https://ec.europa.eu/
End to VAT exemption on importation
The VAT exemption for the importation of goods of a value not exceeding EUR 22 has been removed. As a result, all goods imported to the EU are now subject to VAT.
The Import One-Stop Shop (IOSS) was created to facilitate and simplify the declaration and payment of VAT for distance sales of goods imported to the EU with a value not exceeding EUR 150. If you register for the IOSS, your customers will appreciate that the price they pay represents the final price, VAT included, with no hidden charges or fees.
If you do not register for the IOSS, VAT will be paid by your customer upon importation of goods in the EU. Postal operators or couriers may charge the customer an additional clearance fee to collect this VAT and complete the necessary formalities upon importation of goods.
As EU customers are used to prices including VAT, the payment of additional fees at the time of importation might lead to the customer refusing the package in question.
What changed on 1 July 2021 for the Online Sellers?
Formerly, EU businesses that are selling goods within the EU above a certain threshold (EUR 35 000 or 100 000, depending on the Member State) to buyers located in another EU Member State hadto register and pay VAT in the buyers’ Member State.
Since the 1 July 2021 this rule is abolished and replaced with a new EU-wide threshold of EUR 10 000. Below this new threshold you can continue to apply the domestic rules for VAT (including the SME exemption scheme) on your cross-border sales. If your sales are above this threshold, you are liabale for VAT in the Member State where your buyers are located. Above this threshold, businesses can easily register in a new OSS – where they can easily declare and pay the VAT.
What do you need to do if you use the OSS?
- apply the VAT rate of the Member State where the goods are dispatched to or where the services are supplied;
- collect VAT from the buyer on intra-EU distance sales of goods or on supplies of services;
- submit an electronic quarterly VAT return via the OSS portal of the Member State where you are registered for OSS;
- make a quarterly payment of VAT declared in the VAT return to the Member State where you are registered for OSS;
- keep records of all eligible OSS sales it facilitates over 10 years.
Checklist OSS Registration