The new rules are based on the provisions of the Council Directive (EU) 2017/2455 and the Council Directive (EU) 2019/1995 regarding the so-called e-Commerce VAT Package and will come in force most probably on the 1st of July 2021. Their aim is to change the VAT collection system and to facilitate VAT settlements in cross-border e-commerce between entrepreneurs and consumers (B2C).
At present, the supplier who performs distance sales (transactions with clients from other EU countries, so-called B2C), until the threshold is exceeded, determined separately by each member state, may choose the option of taxing sales in the country of dispatch. After exceeding this threshold, he is obliged to register for VAT purposes in the country to which the goods are delivered (the so-called country of destination) and settle VAT in that country.
The new regulations provide for the extension and modification of the MOSS procedure, which is currently applied to telecommunications services, broadcasting services and electronically provided services, and the creation of a One Stop Shop (OSS) / Import One-Stop Shop (IOSS) for distance sales of goods.
Overview of the procedures
IOSS procedure – Distance Selling of Imported Goods (SOTI)
Under the IOSS procedure, goods are dispatched or transported from a third country to the European Union. This applies to the purchase of goods imported by non-taxable persons – B2C. Under this procedure, the import VAT will be collected by the owner of the marketplace who will settle the transaction under the IOSS procedure or directly from the consumer under the special USZ * procedure.
Under the IOSS procedure, the tax on distance sales of goods will be paid at the VAT rates applicable in consumer / consumption countries, but the taxpayer will not be required to register for VAT in each country separately or submit separate declarations there.
This procedure will require notification in one of the EU countries, in the so-called country of identification.
Under IOSS the supplier / operator of the electronic interface will calculate and collect VAT at the time of sale of goods, and then declare and transfer the globally calculated tax in the Member State of identification. Consequently, upon import, the goods will be exempt from VAT, which will allow their immediate release by the customs authorities.
If the taxpayers are not established in the territory of the Community, they will designate to apply the abovementioned so-called “Intermediary”. “Intermediary” means a person established in the European Union by a taxable person who carries out distance sales of goods imported from third territories or third countries as liable to pay the VAT and fulfil the obligations set out in this special scheme for and on behalf of that taxable person.
The IOSS procedure will apply to shipments with a value not exceeding EUR 150.
OSS procedure – Intra-Community Distance Sales of Goods (WSTO)
Intra-Community distance sales of goods means supplies of goods dispatched or transported by or on behalf of the supplier from a Member State other than the Member State where dispatch or transport of the goods ends to the buyer being non-taxable persons – B2C.
The tax on distance sales of goods will be paid at the VAT rates applicable in consumer / consumption countries, but the taxpayer will not be required to register for VAT in each country separately or submit separate declarations there.
This procedure will also require notification in one of the EU countries, in the so-called country of identification.
Contrary to the IOSS procedure, in the OSS procedure, only after the taxpayer exceeds the threshold of EUR 10,000 (for all B2C sales in the European Union), his supplies are subject to VAT in the country of consumption at the rate applicable there.
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