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VAT E-Commerce Package - New rules effective 1 July 2021

Picture of Paul Redmond

New VAT simplification measures aimed at e-commerce businesses will be introduced across the EU on 1 July 2021.  The EU's E-commerce package provides a range of much needed measures to make it simpler for businesses to account for VAT on sales across the EU.

Broadly, there are three parts to the package, each allowing EU VAT to be accounted for through a single VAT return covering all 27 EU Member States:

  1. Import One Stop Shop (IOSS) – non-EU (including Great Britain) businesses making B2C supplies of goods to the EU with a value up to €150
  2. One Stop Shop (OSS) union scheme – businesses making B2C supplies of goods from one EU Member State to another
  3. One Stop Shop (OSS) non-union scheme –non-EU businesses supplying B2C services where VAT is due in the EU

In each case, the scheme is optional and must be applied for separately.  The package also includes special rules where goods are sold through an online marketplace, making the online marketplace responsible for VAT on the supply.

This is very welcome news and potentially avoids the need for businesses to register for VAT in multiple EU Member States.