There are important changes to the EU rules for Value Added Tax (VAT) for e-commerce transactions, which will apply as of 1 July 2021.
The new rules aim to simplify the existing VAT obligations and reduce the administrative burden for businesses engaged in cross-border online sales. These new rules will also affect companies and businesses involved in cross border e-commerce and will require action by companies exporting to the EU. Whether exporting or distance selling to the EU, companies in the Great Britain should be aware of their obligations.
From 1 July 2021, the EU value added tax (VAT) exemption for the importation of goods into the EU with a value not exceeding EUR 22 will be removed. As a result, all goods imported into the EU will be subject to VAT. If the sale of goods to buyers in the EU is facilitated through an electronic interface, the electronic interface is considered to have made the sale and is in principle liable for the payment of VAT. The EU has established an Import One-Stop Shop (IOSS) to facilitate and simplify the declaration and payment of VAT for distance sales of imported goods with a value not exceeding EUR 150.
From 1 July 2021, if an electronic interface (marketplace, platform, etc.) facilitates distance sales of goods by a non-EU established seller to a buyer in the EU, the electronic interface is considered to be the seller and is liable for the payment of VAT. To declare and pay this VAT, the electronic interface will be able to easily register in a special electronic system called the One-Stop Shop (OSS).
You will find more information on the campaign and the new rules on the European Commission’s website: www.ec.europa.eu/vat-ecommerce