To encourage new cross-border e-commerce sales, the EU has decided to introduce the new OSS & IOSS scheme, to simplify merchants' TAX & VAT reporting. This change took place on July 1st, 2021.
In the EU from July 1st, 2021, new B2C rules will be taken in place for selling goods and services. The goal for this is to simplify VAT compliance throughout the EU.
For companies based within the EU, the main rule is to pay VAT in the country where your customers are located unless your yearly turnover is below an EU-wide limit of € 10,000.
These schemes are optional, but make sure that you follow the local TAX regulations in each country your selling to.
The One-Stop Shop aka OSS is an extension of the previous Mini One-Stop Shop aka MOSS scheme allowing more B2C supplies and services VAT’s to be accounted for. It is an alternative to registering for VAT in each country separately you sell to and makes it easier to sell cross-border within the EU.
There is a Union- and non-Union OSS option depending on where your business is located.
The new OSS covers only B2C cross-border sales of goods and services, so if selling domestically in the country your business is established in, you need to keep your existing VAT registrations.
For more information about OSS, Please visit the European Commission's webpage.
IOSS aka Import One-Stop Shop is an electronic portal for importing B2C low-value goods under €150 into the EU to account for their VAT.
The low consignment value of goods under €22 is removed to make the playfield even for EU and non-EU businesses. IOSS was created to mitigate the impact.
The main advantage of using IOSS is making VAT compliance simple; your customers know the exact cost of their order (as VAT is charged at the time of purchase and not when receiving the goods) and there will not be any surcharges when they are receiving the goods.
For more information about IOSS, Please visit the European Commission's webpage.
The 2021 EU VAT changes should make running your business easier and help to reduce the time you spend on TAX administration so you can focus on your global expansion. It’s important to remember that while these changes will simplify your reporting requirements, you will still need to register for VAT in each country where your stock/inventory is located.
Make sure to follow the recommendations and regulations set by the EU, or the country included in your business transactions.
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