EU VAT E-Commerce Changes

Posted on : 20 Jul 2021

There was a need for a radical update of the current EU VAT regime mostly because of VAT fraud and evasion due to difficulties in tracking online sellers’ taxable supplies. On 1st July 2021, the EU introduced new VAT rules regarding E-Commerce.

The European Union Commission proposed certain VAT reforms to stop the VAT fraud loopholes, thus enabling the VAT regime to be more effective.

One of the key major amendments is the 2021 extension of the existing Mini One-Stop-Shop (MOSS) single EU VAT return, to certain online B2C sales of goods and services transactions. The original implementation date of 1st January 2021 had been extended to 1st of July 2021 due to the COVID-19 crisis.

Some of the key elements of the 2021 EU VAT E-Commerce Package include the following:

-Ending distance selling threshold rules – thresholds for distance sale of goods will be abolished and a unified threshold of EUR 10.000 will be introduced.

-One-Stop-Shop (OSS) – E-commerce sellers and marketplaces will be able to use the OSS to report and pay their VAT obligations in all EU countries.

-Introducing the Import One-Stop-Shop VAT (IOSS) – For sales at, or below €150, sellers will have to declare the VAT charged on imported packages in a new VAT declaration, the Import One-Stop-Shop (IOSS). However, some special arrangements will simplify imported goods of less than 150 euro if the IOSS (import one-stop-shop) is not used.