Last updated on May 27, 2022
VAT MOSS changes

From 1st July 2021 (postponed from 1st January 2021), new measures from the European Commission’s VAT e-commerce package will come into practice. These new measures aim to create more efficient rules for online businesses, support e-commerce start-ups thriving in the EU and tackle fraud.

From 01st July 2021, the scope of VAT MOSS will be improved and extended to allow the reporting of more supplies, turning it into a VAT One Stop Shop (OSS). Currently, this scheme allows a business supplying B2C digital services to declare the VAT due on these sales in a single quarterly VAT return, by registering in one EU member state only. The choice of the member state where you register for the VAT MOSS notably depends on where you are established and whether you have one or more fixed establishments in the EU.  In 2021, the Union scheme (for EU businesses) will be extended to include the supplies of all types of B2C services, intra-EU online sales of goods and specific domestic supplies facilitated by digital marketplaces.  The non-Union scheme for digital services (for non-EU businesses) will be extended to cover all types of services supplied to consumers in the European Union. 

Import OSS

Additionally, a new import special scheme, called Import OSS, will be launched to cover the distance sales of goods imported from non-EU territories and third countries in consignments of an intrinsic value less than EUR 150. Currently, imported goods from non-EU countries with a value lower than EUR 22 are VAT-exempt, which creates a distortion of competition for EU businesses. From 1st July 2021, this exemption will be abolished to ensure a level-playing field for EU and non-EU online retailers trading within the Community.  

When using this import scheme, sellers will need to charge and collect the VAT from EU customers when the payment for the goods has been accepted. The total EU VAT will then need to be declared and remitted in a single monthly VAT return submitted to the member state where the seller is registered for the import scheme.  Should businesses not use this import scheme, for any reason, an additional simplification mechanism will be available for imported goods with a value less than EUR 150 where import VAT will be collected by the customs declarant. The VAT amounts collected will then need to be paid to the local customs authorities monthly. 

Digital Marketplaces

The last significant reform effective from 1st July 2021 is the increased responsibilities of digital marketplaces in collecting VAT on the cross-border B2C sales of goods they facilitate. Under certain circumstances, online marketplaces such as Amazon & eBay will be deemed as supplier for VAT purposes for the supply of the goods facilitated on their platform.

What Next?

Member States had until 31st December 2020 to transpose these new VAT rules into their national legislation. So far, very little guidance has been shared by national tax authorities who are still updating their resources. Please note that on 8th May 2020, the European Commission submitted a proposal to defer the date of application of these measures from 1st January 2021 to 1st July 2021 due to the Covid-19 pandemic outbreak. EU member states now have until 30th June 2021 to transpose and publish in their national laws the new VAT e-commerce package.

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