VAT rules on cross-border business-to-consumer (B2C) e-commerce activities will change as of 1 July 2021, because of the need to simplify cross-border online sales, to address challenges arising from VAT regimes for distance sales of goods and for the importation of low value consignments.

What are the key changes?

•    Up to 95% reduction in red tape with the new OSS (One Stop Shop): MOSS (Mini One Stop Shop) concerning suppliers of TBE (telecommunications, broadcasting and electronically supplied) services will be extended to cover online sellers and marketplaces/platforms. These parties can register with the OSS of one EU Member State covering the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to customers within the EU. Click here to register with Cyprus’ OSS portal.

•    Thresholds: existing thresholds will be abolished and replaced by a new EU-wide threshold of €10,000.

•    “deemed supplier” concept: according which online marketplaces/platforms facilitating supplies of goods will be deemed for VAT purposes to have received and supplied the goods themselves.

•    Record keeping: new requirements introduced for deemed and non-deemed suppliers.

•    Small consignments: the previous VAT exemption at importation of small consignments of ≤€22 will be removed. All goods imported in the EU will be subjected to VAT.

•    IOSS (Import One Stop Shop): the creation of which will simplify the declaration and payment of VAT in distance sales of low goods imported from third countries.

•    Consignments < €150: Special, simplified arrangements will be introduced for distance sales of imported goods in low value consignments.

Who do the new VAT rules on e-commerce concern? 

Everyone in the e-commerce supply chain – this includes:

•    Online sellers and marketplaces/platforms both inside and outside the EU;

•    Postal operators and couriers (including freight forwarders, logistic service providers and customs agents);

•    Customs and Tax administrations;

•    Consumers.

Which transactions are affected by the new VAT rules on e-commerce?

•    Distance sales of goods within the EU carried out by suppliers or deemed suppliers;

•    Domestic sales of goods by deemed suppliers;

•    Supplies of services by EU and non-EU sellers to consumers in the EU;

•    Distance sales of goods imported from third territories or third countries carried out by suppliers and deemed suppliers, except for goods subject to excise duties.

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