EVERYTHING YOU NEED TO KNOW ABOUT THE NEW RULES OF VAT IN ELECTRONIC TRADE Information for EU consumers The cross-border value added tax (VAT) applicable to e-commerce is being modernized in the EU. The new VAT rules for e-commerce in the EU are suitable for the Digital Single Market: fairer, simpler and more fraud-proof. As a consumer in the EU, you don’t have to do anything specific, you don’t have to change your shopping habits or where you are shopping. However, it is worth knowing that from July 1, 2021, VAT exemption for the import of goods with a value not exceeding EUR 22 will be abolished. Consequently, all goods imported into the EU will be subject to VAT. This ensures that goods imported from outside the EU will no longer receive preferential VAT treatment compared to goods purchased in the EU. Therefore, from July 2021, new rules: – ensure that VAT is paid where the goods and services are used; – they will restore fair competition between European and foreign players in the e-commerce market, as well as between online and brick-and-mortar stores, which is even more important in the context of the COVID-19 crisis; – offer companies a simple and uniform system of declaration and payment of VAT obligations on cross-border transactions for buyers in the EU via two new online systems: the VAT One Stop Shop (OSS) or one-stop shop for imported goods (IOSS). The e-commerce explosion caused by technological development has changed the way we trade, we conduct business and we do shopping. This trend has expanded even further in response to the COVID-19 pandemic and the lockdowns in Europe – and will continue to grow in the future. The current VAT exemption is detrimental to companies in the EU, which are always charged with VAT. Thus, imported goods are in competition with goods of EU origin unfairly. Abuse of VAT exemption for imported goods leads to further unfair competition. The current VAT rules need to change so that everyone can benefit from fairer taxation and an easier VAT declaration and payment process. EU citizens will see an increase in public revenues of EUR 7 billion per year – greater transparency of the processes will contribute to an increase in VAT payments and the reduction of VAT fraud. The purpose of the new VAT rules in e-commerce Benefits you, the consumer More information:https://ec.europa.eu/vat-ecommerce As an online shopper in Europe, you don’t have to do anything specific to comply with the new VAT rules. They are designed to ensure fair taxation as well as simpler and more consistent VAT rules for all concerned.
Moreover, from July 1, 2021 for goods with a value not exceeding EUR 150 that you buy from outside the EU, these changes will not imply any additional customs duties if your the seller registers for the new VAT system and uses the one-stop shop for imported goods (IOSS). You will be sure of the final price you pay online with no surprising taxes on delivery – regardless whether the goods come from or outside the EU. If the supplier does not register with IOSS, you will have to pay VAT and possibly customs duties charged by the carrier of the goods when importing the goods into the EU.