New VAT e-commerce rules are here

The European Union has introduced sweeping value added tax (VAT) reforms for e-commerce. Find out how these new rules affect you and everyone in the e-commerce supply chain.

Since 1 July, everyone benefits from the new VAT e-commerce rules. From consumers to online retailers, marketplaces and platforms both inside and outside the EU, as well as postal operators, couriers, customs and tax administrations, all stakeholders have a role to play.

As previously reported on the TAXEDU portal, the aim is to simplify the value added tax (VAT) obligations for companies carrying out online cross-border sales of goods or services. 

The following Q&A presents the various scenarios and the main changes.

As an online consumer, what will change?

From now on, whether you are buying goods online from outside or inside the EU, the VAT rate applied is the same as for goods acquired in your home country. Under the new rules, VAT is paid where consumption of goods takes place. 

Also, the VAT exemption at importation of goods with a value up to EUR 22 has been removed. This means all goods imported in the EU will now be subject to VAT. 

I’m an online seller. Can I continue selling my products?

Yes, and you are strongly encouraged to register for the Import One-Stop Shop (IOSS). This will facilitate and simplify the declaration and payment of VAT for distance sales of goods imported to the EU with a value not exceeding EUR 150. 

If you register with the IOSS, your clients will be ensured they have paid the final price. This will increase trust and transparency. 

What’s more, the previous thresholds for distance sales of goods to buyers in other EU Member States (EUR 35 000 or 100 000, depending on the Member State) will be replaced by a new EU-wide threshold of EUR 10 000.

If your sales are above this threshold, you are liable for VAT in the Member State where your buyers live. You are therefore encouraged to register in the One Stop Shop (OSS), where you can declare and pay the VAT due in other Member States. 

For my business, I use an online electronic interface. How do I become a ‘deemed supplier’?
If you sell your products via a website, portal, gateway, marketplace, platform, application programme interface (API), you can declare and pay the VAT due in other Member States via the OSS.

Once you’re registered, you will be asked to keep on file electronical records of your transactions for 10 years. 

You are also encouraged to register to the IOSS in order to facilitate and simplify the declaration and payment of VAT for distance sales of imported goods with a value not exceeding EUR 150. 

I am a postal operator and courier. What’s changing in terms of deliveries?

Online sellers will have the possibility to register for the IOSS to declare and pay VAT. This means that when you deliver a product that has been bought from a registered online seller, you won’t need to collect the VAT from the consumer.

You can also get in touch with the online sellers to invite them to register to the IOSS so that you ensure a smooth delivery!

Everyone benefits
It is expected that these new rules will not only pave the way towards a fair and transparent competition between EU and non-EU businesses, but it will contribute to increase public revenues in the EU. 

Spark interest with students!
The modernisation of the cross-border VAT e-commerce rules may serve as an opportunity to discuss taxes in the classroom. What is VAT? What is customs duty? Which businesses pay tax?
Teachers can check out the teachers’ corner to get started on creating special lessons. 

Further reading
VAT for e-commerce