As of July 1, 2021, a series of changes to Directive 2006/112/EC (i.e., the VAT Directive) have been implemented, moving from the MOSS (Mini One Stop Shop) already in place, to the OSS (One Stop Shop) regarding the B2C distance sales of goods and services within and outside the EU, sometimes facilitated by the use of electronic platforms and online marketplaces. The rationale for these changes is to facilitate cross-border online B2C sales for the EU and non-EU businesses. To take advantage of the OSS regime, stakeholders will need to be registered in the country of origin, for distance sales of goods to EU member states, the so-called Union OSS. On the other hand, the Non-union scheme is open to taxable persons (suppliers) who are not established in the EU and do not have a fixed establishment there but are required to register for VAT purposes in a member state where the B2C consumers are located in the EU. The OSS is an electronic portal that simplifies up to 95% of VAT obligations for online sellers and electronic interfaces across the EU, as it allows them to:
- Electronically register VAT in a single member state for all distance intra-EU sales of goods and business-to-consumer supplies of services;
- Declare and pay the VAT due on all supplies of goods and services in a single electronic quarterly return;
- For EU businesses, cooperate with the tax authorities in their own Member State and in their own language, even if their sales are cross-border.
In other words, for EU Businesses, if the threshold of €10,000 net VAT is not exceeded, it is paid in the country of origin or destination of the goods and services. Differently, if the €10,000 threshold is exceeded, VAT is paid in the country of destination subject to registration for VAT purposes or enrolment in the special OSS scheme. Unfortunately, the above rules do not apply to UK businesses as after Brexit have become a third country. UK goods coming to the EU will be subject to the IOSS that will facilitate the import of foreign goods into the EU territory. The IOSS allows suppliers and electronic interfaces selling imported goods to buyers in the EU to collect, declare and pay the VAT to the tax authorities, instead of making the buyer pay the VAT at the moment the goods are imported into the EU as it was previously the case. The changes are as summarised in the table below:
- NON-EU TRADER: The taxable person who does not have a fixed establishment in the EU is obliged to register for VAT in a Member State.
- EU TRADER: The taxable person is identified in the country in which he is established or in the country of destination of goods or services.
- IOSS REGIME: The non-EU taxable person may use the IOSS by identifying himself in any country or using an intermediary established in the EU.
VAT registration is carried out electronically and must be submitted by the end of the month following the end of each quarter. The declaration must contain:
- Identification number;
- The amount of the services supplied
- The rates;
- The amount of VAT;
Finally, when it comes the payment of VAT, the taxable person will pay it in the EU nation in which he is identified by applying the rate of the EU country of destination of the goods.