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VAT

VAT and online sales in 2021: a lot of changes

Bob van der Steen

In 2021 the European Union (EU) rules for cross-border online sales are about to change. Due to IT problems and the COVID-19 pandemic the intended changes have been postponed from 1 January 2021 to 1 July 2021. As a result, companies and tax administrations have more time to prepare for the new legislation. The new rules will apply to almost all companies that sell products online.

Package of measures

The package of VAT measures includes multiple changes that we have divided into 4 main parts:

  1. One-stop-shop in the country of residence for paying VAT on sales to consumers in all EU-countries and abolishment of the distance selling thresholds.
  2. Import scheme for shipments from non-EU countries and abolishment of the import VAT exemption on low value goods.
  3. Online interfaces and e-commerce platforms will be (partly) liable for paying VAT on products sold on the interface or platform.
  4. Simplified schemes for start-ups, small businesses and companies that occasionally have cross-border sales.

Our next article (1 July 2020) will discuss the practical implications of the one-stop shop and the abolishment of the distance selling thresholds.

Background

The EU aims to promote the internal market. Online sales play an important role in this matter. The current complex VAT rules and high costs for VAT compliance obstruct this goal and lead to distortion of competition and fraud. The new rules should end these undesired results.

Non-EU countries are also taking measures. We also pay attention to these changes for online sales to Norway and Switzerland, as well as the consequences of Brexit for sales to the United Kingdom.

Do you have any questions?

Our international VAT advisers have extensive experience in online sales and are ready to inform your company about all the rules for online sales. If you have any questions, please do not hesitate to contact your VAT consultant.

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