All you need to know about the new VAT e-commerce rules

All You Need To Know About The New VAT E-Commerce Rules

Is your business aware of the new VAT e-commerce rules and how they affect Malta? As of 1 July 2021, the new European Union VAT e-commerce rules have come into force. Understanding how they influence your company and clients is will help keep you informed. Here’s all you need to know about the new directives.

What is the aim?

With the continuous improvement of e-commerce facilitating tools as well as the Covid-19 pandemic, it’s safe to say that online shopping is on the rise. As a result, the EU has seen fit to add more transparency and strength to e-commerce processes in Europe to combat this rise.

The European Union has introduced a number of amendments to Directive 2006/112/EC (the VAT Directive) to provide EU businesses and shoppers with a better e-commerce experience. The new VAT rules aim to simplify cross-border e-commerce and increase fairness and transparency by eliminating barriers faced by EU businesses in trading activities.

What is changing?

Cross-border VAT applicable to e-commerce that occurs within the EU is being updated:

  • Two VAT systems will be introduced, namely the OSS (One-Stop-Shop) and the IOSS (Import One-Stop-Shop)
  • All goods imported to the European Union will now be subject to Value Added Tax (therefore products with the value of €22 or under are now no longer VAT exempt).
  • EU businesses that are engaging in cross-border sales within the European Union are now subject to paying VAT in the Member State where the buyers are located, should the goods sold should surpass the value of €10,000.
  • Record-keeping requirements are now to be met by online markets, platforms and interfaces, including where such platforms are not deemed to be a supplier.
  • In special arrangements where the IOSS is not used, initiatives concerning distance sales of imported goods in consignments not exceeding €150 will be simplified

Who does this affect?

The new VAT e-commerce amendments will impact everyone in the e-commerce supply chain including:

  • Online sellers
  • Digital interfaces in the market
  • Tax administrators
  • Postal operators and couriers
  • Consumers

Which transactions are concerned

  • Distance sales of goods within the European Union
  • 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.

How We Can Help You

The Firstbridge Team will be happy to offer guidance with applying the new VAT e-commerce rules to your specific case.

Contact Firstbridge to set up a consultation at [email protected]

*This article has been prepared for general information on matters of interest only, based on information available to us up until the time of writing and does not constitute professional advice. You should not act upon the information contained in this article without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this article, and, to the extent permitted by law, Firstbridge does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this report or for any decision based on it.