From July 1st 2021, the European Union will start applying the new rules on taxation of e-commerce with value added tax (VAT). This is due to the growing e-commerce and distance selling market. The new rules are intended to ensure fair competition at EU level for all businesses. It is expected that the new normative framework will also reduce the current losses in VAT collection that occur when importing into the EU small value shipments from third countries (non-EU countries).
From July 1st 2021 amendments to Directive 2006/112/EC on the common system of value added tax come into force, which re-regulate cross-border deliveries made by the undertaking to the consumer through e-commerce. There is also the newly adopted Council Implementing Regulation (EU) 2019/2026. of November 21st 2019 amending Implementing Regulation (EU) no. 282/2011 regarding the supply of goods and services enabled by the use of electronic interfaces and special programs for taxpayers who supply services to persons who are not taxpayers or sell goods at a distance and perform certain deliveries of goods on the domestic market.
The new rules apply to all entities involved in the e-commerce chain: from online retailers / market platforms (both inside and outside the EU) to postal operators, customs and tax administration. The aim is to simplify the business for entrepreneurs who sell goods at a distance (online). At the same time, it opens up significantly more space for entrepreneurs outside the EU who sell goods at a distance (online). Although the new rules primarily concern entrepreneurs who already sell goods at a distance (online), they are also important for entrepreneurs who are just starting an online trading place. By applying the new rules: VAT will be paid in the country where the goods or services were delivered (consumed); a single VAT system will be created for cases of cross-border supplies of goods and services; entrepreneurs will be offered a simpler system for declaring and paying VAT in the EU.
The main changes that take effect are outlined:
1) The "one-stop shop" system for VAT (Mini-One-Stop-Shop, MOSS) will be extended to the sale of goods at a distance in the EU. Namely, the existing MOSS system has proved effective because it allows providers of telecommunications services, broadcasting services and electronically supplied services to register as VAT payers in one Member State and to charge VAT payable in another Member State in that same Member State.
2) At EU level, a new threshold of € 10,000 for distance selling of goods is being introduced. The possibility is allowed that in the case of the supply of telecommunications services, broadcasting services and electronically delivered services and the distance selling of goods below the established threshold of EUR 10,000, VAT liabilities may arise in the Member State where the taxable person supplying such the service is established or in the Member State in which the goods are located at the time when their dispatch or transport begins.
3) For VAT purposes, the institute of "presumed supplier" is introduced, as defined in the second subparagraph of Article 14 (4) of the VAT Directive: ''...A presumed supplier is a taxpayer who is considered to receive good from the basic supplier and then they deliver the same goods to the end consumer...''. As such, the presumed supplier has the same VAT rights and obligations as the supplier. 4) The VAT exemption on imports of goods into the EU whose value does not exceed 22 euros will be abolished. Therefore, all goods imported into the EU will in future be subject to VAT. This limits the possibility of fraudulent actions of certain sellers outside the EU who fraudulently declared lower value goods when imported into the EU at a lower value in order to obtain tax exemption. 5) The new system enables suppliers who deliver goods shipped or transported from a third country to customers in the EU to charge VAT on distance selling of small value goods and at the same time declare and pay VAT using that unit.
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