implified and transparent VAT declaration system, sellers can unified management of EU tax, reduce administrative expenses.
Major changes in the VAT New Deal, mainly involved in several aspects
1. The seller can register in an EU member state, which will apply to all remote sales of goods and cross-border service supply to customers in the EU for VAT declaration and payment. You only need to register the OSS system in this country to declare the VAT of all EU countries.
2. The threshold for distance sales within the EU is cancelled. The existing threshold for remote sales of goods within the EU will be abolished and replaced by a new threshold of 10,000 euros within the EU. Only local companies registered in the EU countries can enjoy the €10,000 threshold. For any third-party country outside the EU to sell products to EU countries, there is no remote sales threshold. If the OSS is not registered, it is necessary to register a tax number in the EU country where the buyer is located. And declare.
3. After the tax reform, all goods imported into EU countries are required to pay VAT. At present, VAT is exempted for small goods imported into EU countries with a value of less than 22 Euros.
4. Commodities with a value of less than 150 Euros can apply to register for IOSS (Import One-Stop Shop) import one-stop service, fast customs clearance. Simplify the process of customs clearance and VAT payment for goods imported into EU countries. Direct orders with a value of more than 150 euros will not be withheld and paid, and import value-added tax will still be paid at the import link in accordance with the current rules.
5. Special terms have been introduced to treat online markets/platforms (such as Amazon, eBay, etc.) that supply goods as suppliers and assume the obligation of withholding and paying VAT under certain circumstances.
a. For goods imported from outside the EU to the EU whose intrinsic value does not exceed 150 euros, sales to EU consumers (regardless of whether the seller is an EU or non-EU seller) will be withheld on the online platform.
b. For sellers of non-EU companies, their goods have been stored in the EU in advance and sold to consumers in the EU (including sales in the same country in the EU and cross-border sales between different countries in the EU), regardless of the value of the goods , Will be withheld and paid by the online platform.
6. The introduction of new record keeping requirements for online markets/platforms that promote the supply of goods and services (including situations where online markets/platforms are considered non-suppliers).
a. Company name, email address, bank account information, VAT number;
b. Commodity description, value, place of delivery or termination of shipment, supply time, order number;
c. Service description, value, information used to determine the place of supply and time of supply, and order number.
Different operating models have different applicable tax policies. For example, independent stations or local EU companies will not be withheld and paid by the platform, and the OSS/IOSS system can be applied. The era of full compliance cross-border e-commerce taxation has come, fiscal and taxation compliance is the general trend, and the era of barbaric growth is about to turn the page.
1. Cancel the 22 euro value-added tax exemption
Before July 1, 2021: Imported to the European Union, all shipments whose value does not exceed 22 Euros are exempt from VAT.
From July 1, 2021: The EU will abolish the 22 euro value-added tax exemption standard, which means that shipments imported into the EU with a value of no more than 22 euros will no longer be exempt from value-added tax.
2. One-stop service (IOSS) platform to declare and pay
Before July 1, 2021: E-commerce companies that directly sell goods to EU consumers should register for VAT payment in accordance with the local regulations of the EU countries where they are sold.
From July 1, 2021: E-commerce companies that directly sell goods worth not more than 150 euros to EU consumers can register, declare and pay VAT in the EU through the new IOSS platform.
Note: The IOSS platform is a non-mandatory and optional platform. It only needs to be registered in an EU member state to manage the sales value-added tax in the entire EU area, so there is no need to pay VAT in each EU country where goods are sold. Do registration. Speed up the import customs clearance of shipments. Shipments with a valid IOSS number do not need to pay import value-added tax at the customs clearance link, which helps to speed up the shipment clearance.
3. The platform can be responsible for collecting and paying value-added tax
According to the new EU value-added tax regulations, in some cases, online shopping malls can also be responsible for collecting value-added tax from consumers at the tax rate of the destination country during the sales process, and declare it to the EU through the IOSS platform.
Note: If you are an enterprise that sells goods to EU consumers through an online mall, we recommend that you review the terms of value-added tax in the contract you signed with the online mall and discuss with them how to collect value-added tax.
VAT New Deal or its impact on sellers
For most European sellers, after the implementation of the EU VAT New Deal, the most direct impact is that operating costs will increase. Take the sites in France, Germany, Italy, Spain, and the Netherlands with the highest concentration of European sellers, the standard tax rates for the corresponding markets are:
This also means that after the implementation of VAT tax withholding and payment, most sellers in Europe will face a cost increase of about 20%, and the profit may be only half or less of the original.
How should sellers respond to the VAT New Deal
Usually, these VAT taxes are included in the price of the product. If you want to balance the previous profit of the product, the more straightforward way is to increase the price. However, based on the implementation of VAT tax payment in the United Kingdom in January this year, most sellers did not choose to increase prices. The main reason is that the lack of competitive advantage in prices will affect sales. In the end, they can only absorb this part of the cost. Whether or not to increase the price, and how much to increase the price, depends on the actual sales situation of the product.