Amendment to VAT Act for 2021: Simplification not only for e-shops?
Are you offering your goods via e-shops? Shipping low-value consignments directly to end users also from countries outside the EU? Organising training seminars, concerts, trade fairs or sports events across the EU? Be on the alert and prepare yourself for changes introduced by an amendment to the VAT Act with planned effect from 1 July 2021.
We already informed you about planned changes and updates to VAT in our June issue of the Tax and Legal Update. In this and the following issues of our monthly newsletter, we will provide you with more details about these significant changes, as they affect not only e-commerce.
The mini-one-stop-shop regime is currently used only for a limited scope of supplies involving electronically-rendered services, telecommunication services, and radio and TV broadcast services. The amendment significantly extends its scope also to other services provided to end users (e.g. tickets for cultural events and trade fairs, services associated with real property or the lease of means of transport), and to distance sales of goods and imports of low-value consignments.
This means, inter alia, that, e.g., e-shop operators will not have to register for VAT in all member states to which they dispatch their goods. Instead, they will have the option to collect VAT payable in one member state (the member state of consumption) via a mini-one-stop-shop, which is an electronic system that payers can access from the member state of their establishment to declare and settle their VAT liabilities relating to supplies subject to VAT in other member states.
The mini-one-stop-shop will operate under the following schemes: the union scheme, the non-union scheme and an import-one-stop-shop ( IOSS), a new scheme for imports. Conditions for using the individual schemes may not seem easy to understand at first glance. For example, entities not established in the EU may in fact register for all the above schemes depending on the type of supply.
Entities having no establishment in the EU may use the union scheme to collect VAT on distance sales of goods within the EU, whereas the non-union scheme may be used by them for all services provided to European end users. Once they decide on a scheme, they must apply it consistently to all services thus provided. For example, service providers will not have to register for VAT at the place where the sports, cultural or other educational events for end users take place (e.g. trade fairs, exhibitions or concerts). This may significantly simplify their administrative arrangements.
A more detailed analysis of new VAT regulations for e-commerce can be found in the European Commission’s Explanatory Notes. Their Czech translation is also available.