With the rapid development of cross-border e-commerce in recent years in the global market at the same time, but also to promote the corresponding financial and tax system reform, to fill the blind spot brought about by the development of e-commerce, the European Union will soon be implemented on July 1, 2021, a major change in value-added tax regulations, the reform will be brought to China's e-commerce enterprises to bring about a new challenge in terms of compliance and a wide range of impact on the business model, recently, I believe a lot of sellers have received the Amazon's notice on EU VAT reforms
I believe all sellers who have received the notification will have the same question as in the picture, what is the impact of the EU VAT change on sellers?
I. Main contents of the new VAT rules effective from July 1, 2021
1. Starting from July 1, 2021, B2C goods sales in EU countries will be uniformly collected and paid by the platform (similar to the UK collection and payment policy);
2. Since July 1, 2021, small parcels imported into EU countries with a value of no more than €22 will no longer be exempt from VAT, and all imported e-commerce parcels will be subject to VAT regardless of their value (similar to the UK);
3. The existing threshold for intra-EU distance sales will be abandoned and a new threshold of 10,000 will be introduced, applicable to the whole of the EU (for EU enterprises only);
4. The EU will introduce an optional VAT reporting procedure called "Union One Stop Shop" ("Union-oSS"). With the help of this simplified reporting procedure, sales partners whose registered address is within the EU can file a uniform VAT return in the member state where they are located for their remote sales made throughout the EU (for EU enterprises only).
Second, why tax reform
The VAT modifications will focus on solving the problems arising from the VAT system used for distance selling of goods and the importation of low-value goods, viz:
1. EU businesses selling goods online to end consumers located in other member states need to register and pay VAT in the member state where the consumer is located if the sales exceed the remote sales threshold (i.e. 35,000/100,000 euros). This imposes a significant administrative burden on businesses and hinders the development of online trade within the EU.
2. The exemption from VAT on imports of low-value goods with a value of up to €22 has led to abusive practices, resulting in a loss of revenue for member states.
3. Non-EU enterprises selling goods from third countries to EU consumers are exempt from VAT and do not need to register for VAT when supplying goods to the EU, thus enjoying a clear commercial advantage over their competitors based in the EU.
In a nutshell: The new rules, which come into force on July 1, 2021, will put EU companies on an equal footing with non-EU companies, while also simplifying VAT obligations for cross-border e-commerce companies and deepening the EU single market.
Questions and Answers
Q1: Is the EU going to implement the collection and payment system like the UK?
Yes, the platform will standardize the collection and payment policy.
Q2: When will the EU VAT withholding policy be implemented?
From July 1, 2021, the new VAT policy will come into force. The European Council's new VAT policy, which was due to come into force on January 1, 2021, has been postponed for six months due to the epidemic.
Q3: Do sellers need to report again after the collection?
Need to declare, because the tax involves two different operations to declare and pay taxes, the declaration also contains the seller needs to refund the tax operation, the platform is only pre-collected taxes, but the VAT declaration or the need to sellers to declare in addition, but the platform has been collected on behalf of the part of the seller does not need to pay taxes for the second time.
Q4: Will the EU Local Enterprise Platform collect and pay on my behalf?
The EU Local Business Platform does not collect payments on behalf of local businesses.
Q5: After the implementation of the new EU VAT policy on July 1, 2021, will imported VAT be subject to the same tax as in the UK?
Yes, the EU has also abolished the exemption from import VAT for "low-value consignments" of goods with an import value of up to €22, so from July 1, 2021, all goods imported into the EU will be subject to VAT.
Q6: Do I need to pay tax for self shipment from EU?
Yes, for non-EU sellers, imported goods from outside the EU with a value of less than €150 will be collected on behalf of the platform, and if the goods have been warehoused in advance in the EU and sold to consumers in the EU (including sales in the same country in the EU and cross-border sales between different countries in the EU), regardless of the value of the goods, they will all be collected by the online platform on behalf of the payment.
Q7: Do I need to register for VAT if my store ships all orders?
VAT is not required for all self-shipment orders, but the platform will still collect and pay VAT on behalf of the customer if the value of the imported goods is less than €150.
Q8:Will the limit for remote sales in EU countries be changed to EUR 10,000?
Yes, but the threshold does not apply to companies with a registered status outside the EU or to companies that are subject to withholding.
Q9: What is the Remote Selling Threshold?
Q10: What are the member states of the European Union?
EU member states include: Germany, France, Italy, Spain, Poland, Czech Republic, Austria, Belgium, Sweden, Netherlands, Bulgaria, Denmark, Estonia, Ireland, Greece, Croatia, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, Portugal, Romania, Slovenia, Slovakia and Finland.
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