VAT / TVA – EU ‘Rule’ Changes for e-commerce
1st July 2021 – VAT / TVA – EU ‘Rule’ Changes – e-commerce
The European Commission’s objective of ‘simplifying’ cross border sales of goods (and services) culminates, as from the 1st July 2021, with VAT applicable for all cross border transactions. Invariably for the sale of goods (e-commerce) the applicable VAT rate will be the VAT/TVA/BTW rate of the country in which the consumer resides (where the goods are delivered/consumed). The current tax free threshold (approx <€22) will be removed as from 30 June 2021.
It is important retailers offering services to consumers in the EU are prepared for the changes and aware of the options and services available to them.
One option is for retailers selling to consumers in the EU low value (under €150) non-dutiable goods to register on the ‘one-stop-shop’ (OSS/IOSS) scheme. IOSS is intended to simplify accounting and paying the variable EU VAT rates. The retailer can register or may appoint an intermediary to manage the tax and administrative obligations. The benefit is that the consumer pays an all-in cost for the product, delivery and tax and customs clearance is facilitated ensuring a streamlined service.
Retailers selling dutiable and / or higher value goods to consumers in the EU and businesses selling to other businesses in the EU will need to conform to the commercial regulations.
In non-EU European countries there is the option to register for similar schemes such as registering for ZAZ in Switzerland.
Logistics companies, whatever scheme utilised by sellers will have added complexity with changed data formatting as well as managing additional service streams of ‘traffic’ being channelled into separate controlled administration and customs pipelines. The ‘hard-start’ date (July 1st) with no testing or soft launchpad makes for an all or nothing approach.
Logistics providers still smarting from the burdens of Brexit at the end of December and early January in some cases are looking to suspend services either side of June 30th to monitor developments and ensure time is available to rectify any shortcomings in their systems prior to commencing operations of the changed channels.
In simple terms the changes are for the most part processes which are data driven. LogiLink’s open cloud platform with a host of best of breed of logistics supporting ‘apps’ is perfectly placed to set up and configure the data streams and enable seamless inter-connectivity with clients supply chains including tax calculations, clearance and final mile delivery. In addition, LogiLink is also able to manage returns and ‘tax-clawback’.
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