European Commission

New rules for e-commerce

The European Commission has published new webpages containing an overview and guidance of the new rules for e-commerce coming into force on 1 July 2021. The rules aim both to simplify the rules and to ensure a more level playing field with online companies from outside the EU. They will be relevant for anyone selling goods online within the EU including online marketplaces. The main changes are that:

• Online sellers, including online marketplaces and platforms, will be able to register in one EU Member State (via the new One Stop Shop) enabling the declaration and payment of VAT on all distance sales of goods and cross-border services to EU customers. This replaces the previous system whereby online companies were obliged to register for VAT in each EU country before they could sell to consumers there;
• Online marketplaces and platforms (‘‘electronic interfaces‘‘) facilitating supplies of goods are deemed for VAT purposes to have received and supplied the goods themselves with the result that there will be a deemed B2B supply by the underlying supplier to the electronic interface and a deemed B2C supply by the electronic interface to the customer;
• New recording keeping requirements are introduced for online marketplaces/platforms facilitating supplies of goods and services including where such online marketplaces/platforms are not a deemed supplier;
• the existing thresholds for distance sales of goods within the EU will be abolished and replaced by a new EU-wide threshold of EUR10,000. Below this EUR10,000 threshold, the supplies of telecommunications, broadcasting and electronic services as well as distance sales of goods within the EU may remain subject to VAT in the Member State where the taxable person is established;
• the current VAT exemption for packages entering the EU with a value not exceeding EUR22 will be abolished. However, the optional Import One-Stop Shop (IOSS) will facilitate the collection, declaration and payment of VAT for sellers that are supplying goods from outside the EU to customers in the EU. Such suppliers and electronic interfaces will be able to collect, declare and directly pay the VAT to the tax authority of their choice, rather than having the customer pay the import VAT at the time the goods are delivered. The VAT rate is the one applicable in the EU Member State where the goods are to be delivered. The aim is to simplify the process for businesses and to protect online shoppers from hidden costs; and
• there will be optional simplification measures for distance sales of imported goods in consignments not exceeding EUR150 will be introduced where the overseas seller or marketplace chooses not to use the IOSS. These will involve the collection of VAT by postal operators/couriers from the customer.