New VAT rules for the distance sale of goods will apply from July 2021 with the implementation of the EU VAT e-commerce package. The changes include the expansion of the One-Stop-Shop solution (OSS), the harmonisation of threshold values and the elimination of the tax exemption for small value shipments.
As of 1 July 2021, the place of distance sale of goods within the EU or distance sale of goods imported from third countries will in principle be the Member State in which the dispatch or transport of goods to the customer ends (the Member State of consumption). The VAT shall be paid in those Member States of consumption. These rules currently apply to distance sales from one EU Member State to another. The same rule will be implemented in the case of imported goods, explain the Ecovis experts.
Suppliers performing distance sales of goods will be able to use a voluntary single point of contact, One-Stop-Shop or OSS, through which they will be able to fulfil the VAT obligations on all supplies of goods in only one EU Member State, the State of Identification. In case of distance sales of goods imported from the territory of third countries, it will be possible to proceed under such a special arrangement only if the value of the consignment for the end customer does not exceed EUR 150 and the imported goods are not subject to excise duty.
We support you in correctly implementing the new VAT obligations for online retailers. Ľubomír Alezár, Managing Partner, ECOVIS LA Partners Tax, k. s., Bratislava, Slovakia
Single Threshold for Exemption within the EU
For the distance sale of goods and telecommunications services, radio and television broadcasting services and electronic services which are supplied to a person other than a taxable person, there will be a uniform limit within the EU of EUR 10,000, whereby such supplies will be subject to VAT in the Member State in which the supplier is established. In the case of the distance sale of goods, the threshold of EUR 35,000 will be removed.
Distance Sale of Goods Imported from Third Countries
The place of supply of goods for the distance sale of goods imported from the territory of third countries will depend on where the dispatch or transport of goods to the customer ends.
If the goods are imported to an EU Member State other than the EU Member State where the dispatch or transport ends, the other EU Member State shall be considered as the place of supply of goods. On the other hand, if the EU Member State of import and the termination of the dispatch or transport is the same, that EU Member State shall be considered as the place of supply of goods only if the One-Stop-Shop applies to such delivery. If this is not the case, import VAT should be levied in line with standard principles.
Even if the changes in distance selling VAT mean work for traders, the Ecovis experts point out that the new rules aim to support European traders and ensure fair competition.