Import One-Stop Shop Scheme and EU VAT threshold regime

Petra Dzankic

Stella Georgiou

A new set of rules based on EU Directive 2006/112/EC that affects online cross-border business to customer (B2C) sales is in force as of July 2021. The new rules, briefly discussed below, aim to simplify the online shopping experience for both sellers and consumers using digital tools and platforms.

Prior to the new directive, packages valued up to EUR 22 imported to EU were exempted from VAT, but this rule has been abolished and effective 01 July 2021, all commercial goods imported in EU are now subject to VAT regardless of value.

For goods valued at EUR 150 or below, VAT can be charged either at the point of the sale by using the new Import One-Stop Shop (IOSS), or collected from the end-customer by the customs declarant. These changes affect business-to-consumer (B2C) sales imported from third territories or third countries to EU customers.

EU businesses involved in e-commerce, selling goods located outside the EU to customers within the EU, can opt to use IOSS. This allows sellers to charge VAT at the point of sale and remit it directly to the authorities, which makes the process more transparent for the consumer and helps to ensure efficient customs procedures. If IOSS is not used, the customs declarant will collect the VAT from the customer prior to delivery and pay it to the authorities. Whatever concerns online marketplaces and platforms for selling goods then the platform is obligated to pay VAT.

A new One-Stop Shop (OSS) scheme was introduced for both sellers and platforms, and is intended for the declaration and payment of VAT by registering in one EU member state for all distance sales of goods and cross-border supplies of services to customers within EU.

Furthermore, the EU has removed the existing distance-selling VAT threshold and a new EU-wide threshold of EUR 10,000 has been introduced. Below this threshold, some specific categories such as telecommunications, broadcasting, electronically supplied services, and distance sales of goods within the EU are subject to the VAT rate of the customer’s EU country of residence.

Finally, the purpose of these changes is to simplify the measures of importing low value goods, apply the same VAT rate for goods if purchased from EU or non-EU states, and eliminate as much as possible the burden of multiple VAT registrations. All these changes could lead to simplified procedures and reduced administration, and are not expected to have negative effects on consumers andtheir buying experience. Eurofast can assist you with all questions regarding your e-commerce business, taxes and procedures, and advise you regarding application to the IOSS.

Eurofast is a regional business advisory organisation employing local advisors in over 23 cities in Southeast Europe and the Middle East (SEEME). Eurofast is uniquely positioned as a one-stop shop for investors and companies looking for professional services in: Tax & Transfer Pricing, Payroll & Employment, Accounting & Audit, and Advisory & Corporate.

 

XLNC MAGAZINE | No. 09 | Spring 2022

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