VAT eCommerce Rules in the European Union

On July 1, 2021, significant amendments to the Value-Added Tax (VAT) Directive came into effect, reshaping the VAT landscape for cross-border eCommerce activities within the European Union (EU). These changes were aimed at simplifying VAT obligations in the realm of online sales to consumers. The primary adjustments comprise the extension of the VAT Mini One Stop Shop (MOSS) to a One Stop Shop (OSS), the regulations governing online marketplaces and platforms as deemed suppliers for specific transactions, the introduction of a new Import One Stop Shop (IOSS), and the implementation of special arrangements for certain imports of goods.

The VAT Mini One Stop Shop (MOSS) initially targeted providers of telecommunications, broadcasting, and electronic services. However, from July 1, 2021, the MOSS has evolved into the One Stop Shop (OSS), encompassing a wider spectrum of services supplied on a business-to-consumer (B2C) basis, including intra-Community distance sales of goods and selected domestic supplies of goods. The introduction of the OSS aims to streamline VAT obligations for businesses involved in cross-border transactions with final consumers in the EU, offering both Union and non-Union schemes to cater to various business structures.

Under the non-Union scheme, businesses without a fixed establishment in the EU can opt to register and pay EU VAT in a single Member State for all B2C supplies of services made to consumers across the EU, while the Union scheme simplifies VAT obligations for businesses selling goods and services cross-border to final consumers in the EU, enabling them to declare and pay EU VAT due on supplies in a single quarterly return.

Moreover, the Import One Stop Shop (IOSS) has been introduced as part of the eCommerce Package, revolutionizing the way VAT on imported goods is managed. This allows taxable persons to register in a single Member State to declare and pay EU import VAT, providing benefits for both suppliers and consumers, particularly in simplifying the process and avoiding additional taxes or customs charges upon delivery of goods.

Alongside these changes, the concept of a deemed supplier has been established for taxable persons operating electronic interfaces, and special arrangements have been introduced for the declaration and payment of import VAT for goods not covered by the IOSS or standard VAT collection mechanisms.

These amendments are pivotal in aligning VAT regulations with the evolving eCommerce landscape, providing businesses with streamlined processes in their cross-border transactions while ensuring a more efficient and transparent VAT system for consumers across the EU.

How can we help?

If uncertain, we can provide an advice whether your business is liable to this particular VAT. We can help with VAT and VAT OSS registration. We also provide services on calculating and reporting VAT OSS for digital businesses. Please call us and we will be happy to help.