One Stop Shop VAT EU: Simplifying Taxation for Business

Are you an entrepreneur selling goods in another country? Then, you should be aware of changes to VAT rules for distance sales and e-commerce deliveries within the EU.

Originally, these changes were set out to take place on 1^st January 2021, but due to the Corona crisis, the European Commission pushed them back by six months, coming into effect 1st July 2021.

Are you curious about the impact that this has on you as an entrepreneur? Keep reading to learn more about One Stop Shop VAT in Europe.

Background on One Stop Shop VAT

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.

The changes in the VAT rules are mainly aimed at simplifying the current system.

From 1^st July 2021, the threshold amounts for distance sales per individual EU country have lapsed to 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 VAT Declaration (OSS)

From the moment that the threshold amount is exceeded, VAT is due in the country where the consumer lives. However, from 1^st July 2021, entrepreneurs 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.

How One Stop Shop VAT Impacts Sales of Goods via Platforms

Before the One Stop Shop VAT came into effect, an entrepreneur who sold goods via an online platform (e.g. Marktplaats, Amazon, eBay, Bol.com) was responsible for the payment of VAT on the sales.

From 1^st 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.

More information

These changes have an impact on entrepreneurs doing business across borders. In order to simplify taxation with One Stop Shop VAT, we offer you our expertise in Europe.

Explore our Sales Outsourcing and HR Outsourcing services.