EU e-Commerce from a VAT perspective
Online sellers have a great opportunity expanding their eCommerce into and across Europe. Your business can reach millions of additional new customers, adding to and diversifying your revenue streams.
eShoppers are now looking for products or goods offered not only in their own country but from other EU countries and also from outside of the EU and overseas. This shows the significance and potential of cross-border online businesses who have experienced a stable growth in the course of the last 5 years. Cross-border sellers from within the EU have increased their sales almost 30%, with non-EU and overseas sellers almost doubled their figures. Please click here for more information.
However, great opportunities can come with complicated implications, one of them being European VAT.
Newly arriving into the EU market and the associated VAT requirements
Importing goods or products into the EU
If you are importing goods or products into the EU, you should be able to identify yourself at customs. For this purpose you ought to attain an EORI number, but, if you are moving goods or products within the EU then you do not require an EORI number.
When the shipment arrives into the EU
It is important to know that import VAT and import duties must be paid immediately at the border. In order to do this you will require to be VAT Registered in the EU country where the goods or products will arrive. Once the goods or products have been imported into the European Union they are considered in ‘open circulation’ and simplification procedures relate to movements of goods and products between EU Member States.
In addition, some EU countries give consent to you extending or postponing the import VAT by appointing a Fiscal Representative and then attaining an import VAT Deferment Licence. With the aforementioned deferment licence you do not require to pay the import VAT to customs, but you only report it in the VAT return as a significant cash flow benefit.
The delivery of goods or products, and services
The sale of goods or products and their physical transportation qualify as a taxable supply for VAT performed from the EU country of import. The actual delivery of services is also considered as a taxable supply.
It is imperative to know EU VAT rates, the formats and the thresholds relevant for each EU country. If thresholds are exceeded, your business must register for VAT in the country of arrival of the goods or products.
Once you have registered there will be periodical compliance obligations to follow that will impact your business.
The VAT implications when selling cross-border
When you have decided to cross-borders in the EU market, there is a good chance that you will be required to register for VAT purposes in one or more countries. There are then many requirements and duties that you will require to conform with. Also ever changing legislation, different applicable VAT rates across the EU, varied types of reporting’s, dealing with local tax authorities in foreign languages are just some of the tasks not to be taken casually, particularly if you would like to avoid unforeseen penalties possibly putting your business at risk. amavat® really can make the difference, let us help and assist you, which would save you time and money, and will ensure your expanding business is fully VAT compliant.
Intrastat reform delayed from 2020 to 2022
The system for collecting statistics on the movement of goods and products between EU Member States made by VAT-registered businesses is called Intrastat.
The EU Commission has planned a new regulation which is called FRIBS (the Framework Regulation Integrating Business Statistics), the purpose being to reform the Intrastat system as part of it’s more extensive project to synchronise the collection of business statistics throughout the EU. Initially it was expected to be implemented from 2020, but now these changes will come into effect as of 1st January, 2022.
Under the modifications that relate to Intrastat, from January 2022 the obligation for EU Member States to submit their statistical data to Eurostat will be limited to ‘dispatches’ (sales) only. Reporting data linked to ‘arrivals’ (acquisitions) will no longer be required. But individual national tax authorities can still choose to maintain their ‘arrivals’ declarations on a local level.
This planned legislation also provides for new obligatory data fields, specifically that declarants will be required to make available the recipient’s ‘VAT number’ and the ‘goods or products country of origin’ in the dispatch declaration. Furthermore, the gathered data must provide a better level of detail than at present.
When these modifications are implemented, businesses will require to make sure that the essential changes to ERP and other systems are made, so that they can populate this new data in the Intrastat dispatch declaration. Recently, certain EU Member States such as Belgium, Hungary and Portugal have anticipated the EU Commission’s plan and have already put in place the necessary additional Intrastat information.
We will be keeping track of the legislative work and keep you informed of any changes in this respect.
For further information please do not hesitate to contact us here.
The information contained above is of a general nature and does not concern the situation of a specific company. Due to the speed of changes occurring in EU legislation, we kindly ask you to determine, on the date of this information, whether it is still up to date.