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Introduction to European Value-Added Tax (VAT) and the impact of tax reform

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ller is still the owner of the goods. Although he does not need to pay taxes himself, he still needs to make a normal VAT declaration.


3. The VAT declaration process is simplified, and it is no longer necessary to record the remote sales quota.


Chinese sellers only need to register the VAT number of the country where the goods are stored.


In the past, many self-delivery sellers thought that there are remote sales thresholds and tax exemptions. European sites do not require strict VAT tax numbers for self-delivery, and they can sell quietly without a registered tax number. However, the new tax law directly cuts off remote sales. Sales threshold and tax exemption policy, self-delivered goods with a value of less than 150 euros and FBA will all be paid and deducted by the platform by VAT.


Understanding of IOSS and OSS


IOSS (The Import One-Stop Shop): is an import one-stop VAT electronic declaration system. Starting from July 1, 2021, the EU will abolish the tax-free quota for imports below 22 euros. E-commerce platforms must collect VAT value-added tax from buyers when goods are sold, and declare VAT value-added tax every month through IOSS. IOSS VAT declaration is only for goods with a value of less than 150 euros. For example, if our Chinese sellers self-deliver to EU buyers, they need to use IOSS to declare.


OSS (The Union One-Stop Shop): is the EU's one-stop VAT electronic filing system. OSS VAT is a new tax law system implemented in order to reduce tax fraud in the e-commerce industry in EU countries, simplify the VAT declaration process and protect local companies' fair competition. The OSS declaration system was implemented on July 1.


OSS will apply to the declaration of VAT for remote sales of products within the EU. When shipping from the EU to buyers in the EU, you can choose how an EU country uses the OSS system to apply for all 27 EU countries. Companies outside the EU are no longer affected by the distance sales quota, and VAT calculations are carried out in accordance with the tax rate of the receiving country. For local companies in the EU, the EU remote sales are 10,000 Euros (including all 27 EU countries). The OSS VAT declaration is a voluntary registration.


The changes in this new policy are still very far-reaching, and both self-delivery sellers and Amazon FBA sellers will be affected.


03 Impact after the tax reform


For European sellers: After the implementation of the EU VAT New Deal, the most direct impact is the increase in operating costs. Most European sellers may face a cost increase of about 20%, and profits may only be half of the original or even less.




For operating shops: sellers failing to fulfill their existing tax responsibilities and obligations, under-declaring or suspending declarations, and paying VAT will result in the account being banned from sales and the risk of closing the store.




Generally speaking, taxation in Europe is becoming more and more unavoidable. This tax reform can completely plug some small loopholes in tax avoidance by sellers, and make the tax compliance of European stations close to perfect. Although the cost of VAT is placed here, there is still a large consumer market in the European site, and there are some tough policies on Amazon, which are the advantages of attracting sellers to enter the European site. A reasonable and standardized VAT policy will encourage the European seller platform to become more Healthy development.