Coming soon: new VAT e-commerce rules

As of 1 July 2021, Value added tax (VAT) obligations will be simplified for companies carrying out online cross-border sales of goods or services. The new rules will ensure that supplies are paid in line with the principle of taxation in the Member State of destination.

Outlining the new VAT e-commerce rules, the European Commission published Explanatory Notes on 30 September, as well as examples of applications, for online businesses.

Based on a Mini One Stop Shop (MOSS) and a VAT e-commerce package, these rules will be applied as of 1 July 2021, instead of 1 January 2021 as previously planned. This means Member States and businesses have more time to prepare.

Launched in 2015, MOSS is an electronic system which aims to help suppliers of telecommunication services, television and radio to declare VAT on Telecommunication, Broadcasting and Electronic (TBE) services in the EU.

Declarations are made via a web-portal in the Member State in which they are identified. MOSS is available to taxable persons which are established in and outside the EU. Without this system, the supplier would be required to register in each Member State in which he or she supplies services.

The second pillar of the new rules, the VAT e-commerce package, aims to facilitate cross-border trade, combat VAT fraud and ensure fair competition for EU businesses. Diverse measures have been adopted, starting in 2017, as follows:

• A Council Directive (EU) 2017/2455, a Council Regulation (EU) 2017/2454 and a Council Implementing Regulation (EU) 2017/2459 published in 2017
• A Council Directive (EU) 2019/1995 and a Council Implementing Regulation (EU) 2019/2026 in 2019
• A Regulation (EU) 2020/194 in 2020

What will change?
The new rules aim to ease cross-border online sales by addressing challenges arising from the VAT regimes for distance sales of goods, and from the importation of low value consignments.

Among other measures, the MOSS will be extended to other services, resulting in a bigger One Stop Shop (OSS), a new special scheme for goods imported from third countries (not exceeding EUR 150) will be created, and an electronic interface will be introduced for businesses facilitating supplies of goods and services.

What’s next?
It is expected that on 1 July 2021, the extension of the MOSS and the special provisions concerning the obligations of electronic interfaces will enter into force.

Want to learn more about VAT? Check out our Micro-clip “Value added tax - VAT” 
 

Read the explanatory notes on VAT e-commerce rules

More information about the VAT e-commerce rules

Learn about the Mini One Stop Shop (MOSS)