Are you an entrepreneur selling goods in another country? Then maybe it is good to know that from 1st July 2021 there will be some changes to VAT rules for distance sales and e-commerce deliveries within the EU!
Originally, these changes were set out to take place on 1st January 2021 but due to the Corona crisis, the European Commission pushed them back by six months. In the meantime, the Netherlands and Germany, among others, have submitted a request to further postpone them for another 6 months meaning their new effective date will be 1st January 2022. At this moment, the question is whether the other member states agree with this... to be continued!
Are you curious on the impact that this will have on you as an entrepreneur? Then keep reading!
Distance sales and the VAT threshold amount will change!
When goods are sold from one EU country to private consumers in another EU country, often referred to as “distance sales”, local VAT is payable in the country where the goods are shipped from, providing that these distance sales do not exceed a certain threshold amount. This threshold differs per country. If the threshold amount for the country concerned is exceeded, VAT must be paid in the country where the consumer lives. In order to be able to pay VAT in a European country the entrepreneur first has to register the company in that country.
Changes as of July 1, 2021:
The changes in the VAT rules are mainly aimed at simplifying the current system.
From 1st July 2021, the threshold amounts for distance sales per individual EU country will lapse. There will therefore be one threshold amount of € 10,000. This threshold applies to all distance sales of goods together with sales of digital services to consumers in the EU. If sales remain below this threshold entrepreneurs may charge VAT from the EU country where the transport of the goods started.
One-Stop-Shop declaration (OSS)
From the moment that the threshold amount is exceeded, VAT is due in the country where the consumer lives. However, from 1st July 2021 entrepreneurs will have the option of submitting one special VAT return for their cross-border distance sales within the EU in the EU country of residence. By using this so-called “One-Stop-Shop declaration”, they no longer have to file separate VAT returns in each of the individual EU countries where distance sales are taxed.
VAT on sales of goods via platforms
Currently, an entrepreneur who sells goods via an online platform (e.g. Marktplaats, Amazon, eBay, Bol.com) is responsible for the payment of VAT on the sales.
From 1st July 2021, the relevant platform may be responsible for this. The arrangements for platforms apply in the following situations:
- Cross-border sales of goods to private individuals with a maximum value of € 150 that have not yet been imported into the EU
- The sale of goods to private individuals in the EU by non-EU-based entrepreneurs.
The platform is then deemed to have delivered the goods to the private individual and is liable for VAT in the private individual's country.
Although the effective change date is not yet set in stone, the changes will have an impact on entrepreneurs doing business across borders!