As from 1st July 2021, the European Union will be implementing several changes within the Vat sphere with regards to obligations for Business to Consumer (“B2C”) e-sellers and marketplaces. These reforms aim to simplify obligations for companies which embark in cross-border sales of goods or services, mainly online, by ensuring that VAT on such sales is paid correctly to the Member State of the final customer.

These reforms include the expansion of the current MOSS platform, the launch of the new Import One-Stop Shop (“IOSS”) Return which will put an end to low-value import VAT Exemptions and lastly will see the alignment of the distance sales threshold.

Distance Sales Threshold

The current regulations in place states that once an EU supplier exceeds the country specific threshold for sales in which they are selling, said supplier needs to register for VAT in that country. As from July, this will no longer be the case. The new regulations will see the seller charge the VAT rate applicable in the buyer’s country of residence. The only exception to this is the Micro-Business Threshold.

Micro-Businesses Threshold

A new exemption is being introduced for those companies which are established within an EU country. This exemption will only be available for businesses whose sales do not exceed €10,000 in each of the last two years. The businesses who qualify for this exemption will be able to charge local VAT from which country the goods are to depart from.

Launch of the One-Stop-Shop EU Vat Return

The new regulation will allow e-commerce sellers selling overseas to record all their EU sales through the OSS. This gives the possibility to the trader to refrain from registering for VAT in each country it does business in.

All Orders shipped to the EU are subject to VAT.

As from July 2021, buyers will be required to pay VAT on all purchases imported. Previously, buyers in the EU purchasing goods from outside of EU for a total value of €22 were exempt from paying VAT. Suppliers outside the EU will now have the choice whether to collect VAT when the order is made through the Import One-Stop Shop (IOSS) or whether they will not collect VAT and let customers be charged upon delivery of goods by the carrier.

Import One-Stop Shop (IOSS)

Suppliers who choose to collect VAT on purchases below €150 are advised to make use of the new Import One-Stop Shop. The IOSS is a monthly VAT Return for all low value exports into the EU. Non-EU suppliers can opt for a VAT intermediary to file such returns. If suppliers opt not to use the IOSS, they will need to submit a separate VAT Return in every EU country they supply goods.

How can we Help?

We would be happy to discuss any queries you may have relating to the OSS or IOSS returns, on how we may help with deregistering your VAT number or with any other questions regarding the upcoming E-Commerce Package.

Get in touch with Karen Spiteri Bailey, Principal - Outsourcing and VAT Advisory ([email protected]) or Kenneth Cremona, Assistant Manager - VAT Advisory and Compliance ([email protected]).