Stringent VAT Rules and Complicated Tax Structure

VAT is collected on business transactions, imports and goods that move between EU countries. If you store or sell goods to customers in an EU country, you may be required to register for VAT in that country. While each My European shop will take the responsibility to be VAT compliant, we support you with resources and tools for your VAT registrations and filings in EU countries. We can also provide you VAT registration for free. Whatever are the Government charges and paperwork cost entails, that will be borne by the vendor. The choice remains with you if you are willing to go for your personal VAT.

Use VAT Services of My European Shop which is absolutely free of cost for you.We work with a third-party global tax service vendor to provide this service in the United Kingdom, Germany, France, Italy, Spain, Poland and the Czech Republic. Currently, non-EU-based sellers are supported for VAT registration and filings in the UK, Germany and the Czech Republic, countries that do not require fiscal representation*. VAT Services for other countries that require fiscal representation will be shortly available.

The time it takes to become VAT registered can differ. To circumvent any kind of delays, we strongly recommend that you initiate the process as soon as you register your EU seller account. Required documentation documents for your VAT Registration would primarily include:

Articles of Association for your business.
Letter from your bank confirming that you hold an account with them.
Power of Attorney to your tax advisor, in case you are using one. Additional documents such as Proof of Address and government-issued IDs for company owners may also be required in some countries.

The new VAT rules apply to business-to-consumer trades in the European Union as of 1 July 2021 for business-to-consumers (B2C) transactions will impact suppliers of services, goods, marketplaces and postal couriers at various levels, and invariably so.

What is VAT in the European Union (EU)?

A multi-stage turnover tax levied on the value added at each stage of production and
A cost that is generally borne by the end consumer but collected by the

Under the current EU rules:

Suppliers/sellers might be required to register in various Member States to collect EU VAT at various rates on their services/sales;
An optional declarative system (called the Mini One-Stop-Shop or “MOSS”) allows suppliers of B2C digital services to declare the VAT due on their B2C digital supplies in a single quarterly VAT return, by registering in one EU Member State
Imported goods from non-EU countries with a value lower than €22 are VAT-exempt.

Why these new rules?

To facilitate thriving and sustainable EU cross-border trades
To ensure fair competition for EU suppliers
To effectively combat VAT fraud

Here’s what is the latest development

An extension of the optional declarative system to both B2C suppliers of services and goods, while circumventing multiple VAT registrations and reporting obligations in the EU (called the One-Stop-Shop or “OSS”).
Complete elimination of the “distance sales threshold” and the inception of a unique and common threshold of EUR 10,000 throughout the EU, up to which B2C EU cross-border supplies remain subject to the VAT rules of the Member State of dispatch, and beyond which supplies are subjected to the VAT rules of the Member State of destination
Complete redundancy of the exemption for imported goods with a negligible value not exceeding €22.
A single report scheme covering sales of imported goods to EU consumers up to a value of €150 and for which a VAT exemption upon import will apply if the trader declares and pays the VAT at the time of the sale using this declarative system (called the Import One-Stop-Shop, or “IOSS”).
The possibility to make Customs declarants (e.g. postal operators or courier firms) liable to collect import VAT from consumers via a monthly payment
The shift of EU VAT liability to marketplaces when they facilitate the delivery of goods to the EU consumers

Who is bearing the brunt?

Suppliers of services to EU consumers
Various VAT rates currently apply to their services, contingent upon their nature and the place of residence of the clients (e.g. transport services, catering services, leasing of means of transport, etc).

As from 1 July 2021:

Businesses may give a shot to leveraging the One-Stop-Shop declarative system to ease their reporting
The choice of the EU Member State where they could register for the
One-Stop-Shop declarative system will be contingent upon where they are established and whether they have one or more fixed establishments in the EU.

Sellers of goods to EU consumers

The new VAT rules will impact their reporting obligations and their margins, depending on the value of the goods, their origin, and whether marketplaces boost the sales. With the introduction of a common and unique threshold of EUR 10,000 through the EU, the new rules will lead to a well-organized application of the VAT of the EU Member State of the final arrival of the goods.

If the small-sized businesses or entrepreneurial ventures are selling less than €10,000 per annum of goods and services to consumers in other Member States, they will be able to charge domestic VAT and report their sales below this threshold in their regular domestic VAT return
If they are a B2C sellers dispatching their goods from a single EU Member State, they won’t need to register for foreign VAT and complete multiple VAT filings in the EU Member States, where they are selling their goods to they can choose to complete and file a quarterly return under the One-Stop-Shop declarative system alongside their regular domestic VAT return;
If they are a non-EU sellers (including post-Brexit K.), they may also use the One-Stop-Shop declarative system by registering as a “non-Union” taxpayer with the tax authority of the EU Member States of their choice (except where they have already fixed establishments in the EU), they could then file quarterly returns under the One-Stop-Shop declarative system but would need to file a regular domestic VAT return in at least one EU Member State;
If the businesses sell imported goods, it is important to note that thelow-value consignment stock relief (for goods valued at €22 or below) will be abolished, but for consignments of €150 euros or below, (1) they will only be required to charge VAT at the time of the sale by using the Import One-Stop-Shop (i.e. no VAT will be due on import), or (2) they could elect to have the import VAT collected from the final customer by the Customs declarant (postal couriers);
If they are making use of online marketplaces to facilitate their transactions, they might de-register for VAT in the certain EU Member States since the marketplace might become the deemed supplier of the goods, turning accountable for collecting the VAT at the time of the sale

Marketplaces facilitating cross-border sales of goods

If the small-sized businesses or entrepreneurial ventures are selling less than €10,000 per annum of goods and services to consumers in other Member States, they will be able to charge domestic VAT and report their sales below this threshold in their regular domestic VAT
If they are a B2C sellers dispatching their goods from a single EU Member State, they won’t need to register for foreign VAT and complete multiple VAT filings in the EU Member States, where they are selling their goods to they can choose to complete and file a quarterly return under the One-Stop-Shop declarative system alongside their regular domestic VAT return;
If they are a non-EU sellers (including post-Brexit K.), they may also use the One-Stop-Shop declarative system by registering as a “non-Union” taxpayer with the tax authority of the EU Member States of their choice (except where they have already fixed establishments in the EU), they could then file quarterly returns under the One-Stop-Shop declarative system but would need to file a regular domestic VAT return in at least one EU Member State;
If the businesses sell imported goods, it is important to note that the low-value consignment stock relief (for goods valued at €22 or below) will be abolished, but for consignments of €150 euros or below, (1) they will only be required to charge VAT at the time of the sale by using the Import One-Stop-Shop (i.e. no VAT will be due on import), or (2) they could elect to have the import VAT collected from the final customer by the Customs declarant (postal couriers);
If they are making use of online marketplaces to facilitate their transactions, they might de-register for VAT in the certain EU Member States since the marketplace might become the deemed supplier of the goods, turning accountable for collecting the VAT at the time of the

Marketplaces facilitating cross-border sales of goods

Under certain unique circumstances, digital marketplaces will be responsible in collecting VAT on the following cross-border B2C sales of goods they facilitate, in order to effectively combat VAT fraud:

Sales of goods imported from third countries by EU or non-EU sellers to EU consumers of consignments not going above and beyond €150
Sales of goods being in the EU by non-EU sellers to EU consumers of any value
Marketplaces will also be required to keep a record of sellers’ transactions for allowing VAT audits
Customs declaration (postal couriers)
It is imperative for all shipments to be cleared through Customs (abolition of the VAT de-minimis rule for Customs declaration)
A super-reduced data set (“H7 dataset”) could be utilized in Customs declarations on import of parcels for goods up to €150 and subject to Customs duty relief
The Customs declarant should be able to declare and pay import VAT electronically via a monthly declaration, representing the final consumer, if the value of the goods is below €150.01 and when the customer is in the EU Member State of

What are the main implications for businesses?

Compliance

Compliance costs savings by using a single VAT return and reducing the number of VAT registrations in the EU
Possible appointment of an intermediary who will report the sales on behalf of the seller and account for the

Systems

Suppliers/sellers systems must recognise the VAT status of their clients, the countries of import/dispatch/arrival of the goods and capture the VAT rates applicable (there are more than 80 different EU VAT rates)

Contracts with marketplaces

Contracts should be reviewed to ensure that VAT accounting responsibilities are clearly defined in light of the new rules.

Prices

Cross-border B2C sales of goods might be subject to the VAT rate of the Member State of destination of the goods, whereas up until now, it might only be the case when national thresholds exceed (up to €100,000 per year). Either the sale price or the seller’s margin will
The low consignment relief will be abolished, so VAT will be due on those sales at the rate applicable in all EU countries This will also heavily impact the price and margin of the products.
Compliance costs may invariably cause a spike in the cost of

Our Expertise

My European Shop has experts in both VAT and Customs legislation and procedures, and we can assist foreign businesses in various ways to help ease your work:

Evaluate the impact of the 2021 rules on your business model
Analyze the business and legal implications of the different options available (VAT registrations in all EU Member States, registration under the OSS/IOSS declarative system attenuate the risk of non-compliance, gauge the effect on the pricing of the products)
Implement any changes to systems and process accordingly to comply with the new rules
Assistance with VAT registration under the OSS/IOSS declarative system in Luxembourg or in any other EU Member State
Complete assistance with VAT reporting

For More Information :

Str Aleea Cauzasi nr 57 Sector 3 Bucharest Romania

Nábrežie slobody 795, 020 01 Púchov, Slovakia

5F 90 vetelintie Helsinki 00420 Finland