New tax rules for e-commerce: EU VAT One-Stop Shop

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Camilla Jacobsen
by Camilla Jacobsen 28/05/2021

The new VAT One-Stop Shop model will enter into effect on 1 July 2021. Learn how the model will affect online sellers within the EU.

New tax rules for e-commerce:  EU VAT One-Stop Shop

The new VAT One-Stop Shop model will enter into effect on 1 July 2021 as a part of some new common e-commerce VAT rules for B2C sales of goods and services within the EU. In this blog, we focus on the new One-Stop Shop element and how that will potentially affect you and your webshop.

The current VAT rules for B2C sales of goods and services within the EU

As the rules are now, the following applies: If you sell goods to other countries in the EU through distance selling (via websites, email, or telephone), you must report and pay VAT in the countries where your goods are sold, unless your turnover is below a specific country’s’ VAT threshold, which varies from country to country. For example, the Danish limit for distance selling of goods is DKK 280,000 corresponding to approximately EUR 33,600, while in Germany it is EUR 100,000

If, on the other hand, you sell electronically delivered services, telecommunications services, and broadcasting services to private consumers in the EU, you do not have to report and pay VAT in all the EU countries where you sell your services - and you can instead choose only to pay and report VAT in your company’s home country. This model is called the MOSS model (mini one-stop shop).

New common VAT limit for distance selling and services

Instead of the rules above, a common EU distance selling threshold will be implemented from 1 July 2021, covering both distance selling of both goods and electronic services to private consumers in the EU. This limit will be 10,000 EUR, so it is significantly lower than many of the national distance selling limits that currently exist. At the same time, this limit will apply to all the sales you make in other EU countries and no longer for each country you are selling to.

If you sell for less than EUR 10,000 to consumers in EU countries, you simply charge the VAT rate your country has set and report and pay VAT to your local tax authorities. If the sale exceeds the distance selling threshold, you must register, collect, and report VAT in the private consumer’s home country - in all the EU countries you sell to. If you sell, for example, to the value of 4,000 EUR to German consumers and 7,000 EUR to French consumers, total sales exceed over 10,000 EUR - so, you will have to collect and report VAT in both countries. You need to keep in mind that countries’ VAT rates are different, and it is your responsibility to find out what VAT rates apply in the country in which you sell your products. In Denmark, for instance, the standard rate is 25%, while in Germany, it is 19%. Get an overview of the current VAT rates here.

The purpose of a common distance selling limit is to facilitate companies’ administrative tasks and, at the same time, increase the equality of competition.

VAT One-Stop Shop

In line with the new rules, there will be an extended model (One-Stop Shop), which will make it easier to manage VAT when you sell goods and services. If your sales exceed the distance-selling limit, you can sign up for the voluntary OSS model - so that you only have to register for EU VAT in a single country. In this way, it will be possible for companies that cross the VAT threshold to report VAT to their national VAT authorities when they sell goods to private consumers in other EU countries.

If you are already registered in the existing MOSS model, you will automatically be transferred to the new OSS model when it enters into effect.

The purpose of the new model is to facilitate companies’ administrative tasks in connection with reporting and payment of VAT. Once you are registered in the OSS model, it is easy to expand to more EU countries on an ongoing basis.

Register your webshop for the VAT One-Stop Shop

You can register for the OSS three months before the model enters into effect, which is 1 April 2021. Each EU member state will have an online OSS portal where you can register. Check this with your local tax authorities.

Do you want to send goods to other EU countries?

You can easily do this through Shipmondo. Create a free account and start selling goods to other European countries today! Before you plunge into new countries, you can read our guide explaining how to ship worldwide. You can also read our blog on how to expand your webshop to Germany.

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