20 May Adjustment of the delivery threshold and what this means for you
To whom do the new delivery threshold regulations apply at all?
From 1 July 2021, the new EU VAT rules will come into force. They apply to all businesses that make business-to-consumer sales directly or via online platforms to customers within the EU. And since we are your perfect partner for cross-border e-commerce, this delivery threshold regulation definitely affects us. And probably you too.
By the way, the regulations apply both to companies that have their headquarters in the EU and to those companies that have their headquarters outside the EU but sell to customers within the EU. Clear so far?
What exactly is the delivery threshold in 2021?
Currently, each EU Member State can set its own delivery threshold. As you can imagine, this does not make the application of the delivery threshold any easier. In order to make things simpler and clearer, a uniform delivery threshold of €10,000 will be set for all EU countries from 1 July 2021.
What does this mean? That you have to register for VAT in every EU country to which you sell goods from the moment your cross-border turnover exceeds the supply threshold.
Important: this regulation only applies to cross-border sales within the EU!
Important: the calculation of € 10,000 refers to all sales in total within the EU countries!
Mini-One-Stop-Shop (MOSS) becomes One-Stop-Shop (OSS)
This is probably the most positive change for online shops that sell to several EU countries. The EU promises itself a 95% reduction in bureaucracy. That sounds good.
So if you decide to register for OSS in the future, you no longer have to register for tax in the respective EU country in which you sell goods. Instead, you can handle the VAT from only one point of contact. Thus, from the very first sale, the VAT rate of the EU country in which the end customer lives has to be calculated. This means immediately, not only after reaching a certain threshold.
As a business, you can then fill out your so-called One Stop Shop registration, in which all your sales within the EU are listed. The sales tax will then be forwarded to the relevant sales tax authority of the respective EU country.
What is the advantage of all this? Intra-Community distance sales will become much simpler overall. And clearer. And cheaper. That's going down like oil.
Can I also process domestic sales via the OSS?
Based on our current knowledge, as an Austrian company you still have to process your sales made in Austria via the Austrian tax office, but you can process all other sales made in the EU directly via the OSS.
If there is any news regarding the processing of domestic sales (i.e. whether you can also process them via OSS), we will of course keep you informed. Unfortunately, we can't say anything fixed about this at the moment, but we'll stay tuned.
What other important changes are there to the supply threshold VAT?
In addition to the adjustment of the delivery threshold, VAT will be levied on all goods imported into the EU from 1 July 2021, irrespective of the value of the goods, i.e. even consignments with a value of less than € 22 may no longer be imported into the EU free of VAT from this date.
And why? Because it is supposed to compensate for the competitive disadvantage of EU companies. Good, that makes sense.
What is this Import-One-Stop-Shop? Can it do anything?
Oh yes, there was something else. There's this term Import-One-Stop-Shop - or IOSS for short - floating around. But what does that actually mean?
The sale of imported goods from non-EU countries is significantly simplified by registering for the IOSS. In principle, this is comparable to the OSS, but applies to goods imported into the EU.
Although the exemption limit for goods imported into the EU with a value of less than € 22 has been abolished, you can now process your goods imported into the EU that do not exceed an individual value of € 150 much more easily via the IOSS. However, if the individual value of the goods exceeds € 150, you will have to pay customs duty on the goods again in the recipient country. Just like before.
Is there anything else to note about the new delivery threshold regulation?
For example, the EU's new VAT rules, which come into force in July 2021, apply to online platforms that increase sales transactions and allow traders to sell their goods directly to customers.
What does this mean again? In short: in the future, some online platforms will be responsible for everything related to the VAT owed by the end customer and no longer the entrepreneur who sells via these platforms. The value of the domestic or intra-Community supply is irrelevant.
The advantage for some businesses is that they may be able to be exempted from VAT within the EU, as from now on the online platform is considered the supplier of the goods and is therefore responsible for everything to do with VAT collection. For some EU sellers, the administrative burden will therefore be much lower. If you are one of them, congratulations!
Oh yes, one more important detail: storing goods in another EU country also obliges you to take care of tax registration and other tax obligations in that country (for example, if you as an Austrian trader have a warehouse in Italy).
Why all this?
The reason for the change in the delivery threshold regulation is - how could it be otherwise - the tax losses of the individual EU countries. Moreover, online trade is such a new, rapidly growing industry (world domination and so on) that such regulations first have to be established in order to be able to meet the needs of the state on the one hand and those of online traders on the other.
Do you still have questions? No problem, our experts for everything will be happy to help you.
One more thing: we know a hell of a lot about pretty much everything, but for very specific questions, it's best to consult your tax advisor. Not only can he read between the lines, but he also knows the tiniest innovation that could be relevant for you. Down to the smallest detail. Experts for the win!
Linda has - kindly - recently joined our merry band and will in future support our blog and SEO departments (both of them) energetically and in writing. That's why she'll also be courageously bringing you everything possible and impossible on the subject of e-commerce here and in the foreseeable future. And that, dear friends of advanced online commerce, is something you can already look forward to. As are we, of course. After all, you can't read enough about certain things. Which is why we warmly recommend that you visit our MH blog page more often. Not only because of Linda. But also 😉