Summary of e-commerce changes (2021 VAT amendment)
From 1 July 2021, significant changes in VAT on the cross-border sale of goods over the internet enter into effect, concerning both sales within the EU and imports from third countries. The place of taxation will be the country of the recipient, which can lead to multiple VAT registrations. An alternative is to use the special one-stop-shop (OSS) regime, where the seller manages their taxes from one portal (one country).
The amendment to the VAT Act regulating cross-border e-commerce ( the e-commerce amendment), is awaiting its third reading in the Chamber of Deputies. In this article, we summarise the basic elements of the changes.
The sale of goods to end consumers at a distance (over the internet) will generally be taxed in the consumer's country. National limits for sending goods shall be abolished; the only exception will be available to small enterprises established in one EU member state and not exceeding the annual threshold of EUR 10,000. This amount includes not only the distance sale of goods, but also the provision of services within the EU. Such businesses may use a simplified treatment and tax the sale of goods in the state of dispatch.
In response to the above change, the OSS application has been significantly extended. Rather than registering for VAT in individual EU countries, the seller can register for the OSS and settle the EU VAT on selected transactions within this special scheme. As the name suggests, the basic idea is the possibility to manage all EU taxes from one place. The OSS scheme is applicable to the distance sales of goods, selected distance sales of imported goods, and to services provided to EU consumers (such as a sale of tickets for events held in other EU states, real estate services or rental of means of transport). In the case of distance selling of imported goods, OSS, or more precisely IOSS, shall be applicable to consignments of actual value of up to EUR 150 that are not subject to excise duty.
The one-stop-shop will operate under several different schemes: the Union scheme, the non-Union scheme and the newly added import scheme (import-one-stop-shop, IOSS). These are separate modules, each with their own registration and returns (including different deadlines for filing the returns). In the future, the OSS is to be further extended to B2B cross-border supplies of goods.
Furthermore, with the abolition of the VAT exemption on imports of small-value consignments (all consignments imported from abroad will now be subject to VAT regardless of their value even if it is minimal), a completely new special regime has been introduced for imports of low-value goods. Thanks to this, holders of the relevant permit could pay VAT on imports of low-value consignments collectively per calendar month, by a supplementary customs declaration.
Finally but importantly, please note the new responsibilities of internet platforms, as they may become deemed suppliers for VAT purposes.
Registrations for the OSS are now open and with the help of an intermediary also available to entities established outside the EU. The above mentioned internet platforms may also register for the OSS.