From 1 July, any EU business that invoices more than €10,000 in e-commerce sales to consumers in other member states will have to invoice at the VAT rate corresponding to that state under the destination taxation system. Thus, the tax will be levied in the Member State where the final consumer who purchases the goods or receives the service is resident.
This change is regulated under the One-Stop Shop (OSS) regime and is intended to reduce indirect tax burdens for entrepreneurs and the self-employed.
When and where will these changes be implemented?
The reform will come into force on 1 July 2021 in all EU member states and will affect all e-commerce businesses with a turnover of over ¤10,000.
What new features does this new VAT system introduce?
Elimination of the thresholds for distance sales.
End of VAT exemption on the importation of low-value consignments
VAT liability on Marketplaces for distance sales of low-value imported goods
Is it necessary to register the company in other Member States?
It will no longer be necessary to register for tax purposes in another Member State when invoicing above the threshold. From the date of implementation, it will be possible to submit all VAT returns in your own state via a web portal through the One Stop Shop system for sales made in all other states.
To do this, the company must register in the system, making additional quarterly VAT returns (monthly, in the case of distance sales of goods imported from third countries) and the tax agency will be responsible for the payment of taxes in the corresponding country.
Is it obligatory to register for this system?
No. It is an optional scheme, but it avoids the need to identify and register in each Member State of consumption, as long as the turnover exceeds 10,000 euros.
What are the new obligations for e-commerce platforms?
They will have to keep the records of intra-Community transactions in which they are involved for a period of 10 years, provided that the platform establishes the conditions of use under which the goods are delivered (it only makes its technology available to users).
All entrepreneurs or professionals wishing to opt for the One-Stop Shop scheme must submit Form 035 to register, except for those who were already registered under the Mini VAT One-Stop Shop (MOSS) scheme, who will be automatically registered under the new special scheme (OSS). In the latter case, if they do not wish to apply the new regime, Form 034 for cessation in the mini VAT one-stop-shop regime applicable to telecommunications, radio or television broadcasting services and electronically supplied services must be submitted before 16 June 2021.