New rules relating to online cross-border supply of goods and services, as well as special VAT schemes, will come into effect from July 1 2021.
The aim of the EU Commission is to simplify existing VAT compliance obligations for distance sellers, reduce associated burden, as well as combat and prevent VAT fraud and evasion in the e-commerce sector.
Non-union and union one-stop-shop scheme
Transformation of the existing mini-one-stop-shop (MOSS) digital platform, currently applicable only for telecommunications, broadcasting and electronically (TBE) supplied services, into a wider one-stop-shop (OSS) platform, which will be applicable to all B2C services supplied to a member country where the supplier is not established, intra-community-distance sales of goods, and certain types of domestic supply of goods carried out by deemed suppliers.
Businesses facilitating the supply of goods via an online electronic interface, qualify as ‘deemed suppliers’ and will become liable to pay the VAT corresponding to the online supplies.
The non-union OSS scheme can be used exclusively by non-EU established suppliers for all B2C services (e.g. accommodation services, admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events, transport services, services relating to movable tangible property), including TBE.
EU-established suppliers should declare all B2C services through the union OSS. The latter may also be used by both non-EU established and EU-established suppliers/deemed suppliers, to declare intra-community distance sales of goods and specific domestic supplies (goods owned by a non-EU established supplier with supply facilitated by a deemed supplier).
Domestic distance sales thresholds are replaced by a €10,000 (approximately $12,000) EU-wide annual turnover threshold applicable to TBE services and intra-community distance sales of goods, supplied by suppliers/deemed suppliers established only in one member country.
Suppliers/deemed suppliers using the OSS schemes should ensure to submit quarterly OSS VAT returns and settle the corresponding VAT to the member country of identification, by declaring all eligible electronic supplies. Relevant records should be maintained for 10 years, for potential audit verification needs.
Import-one-stop-shop scheme
The VAT exemption in the importation of small consignments up to €22 is abolished, thus, VAT will be due for all imported goods irrespective of their value. Customs duties will not be imposed to imported 'low value goods' (i.e. goods with intrinsic value not exceeding €150), excluding excisable goods, resulting to reduced customs burden and administrative costs.
Suppliers/deemed suppliers may opt to use the simplified import-one-stop-shop (IOSS) scheme to settle their VAT liabilities on imported low value goods, for which no minimum threshold exists. Depending on the case, an intermediary may be required to handle the IOSS.
VAT should be collected from the end-customer at the time of the online supply, while it should be declared and paid through the IOSS on a monthly basis, along with a valid IOSS VAT identification number.
Similarly to the OSS, there is a 10-year obligation to maintain the relevant records, for potential audit verification needs.
Alternative special arrangements for the declaration and payment of import VAT
When the IOSS is not used, an alternative and optional simplification scheme designated to be used by EU-established postal operators, couriers, and customs agents (declarants) is introduced for low value imported goods (excluding excisable goods), to the extent that such goods are released into free circulation in the member country where the dispatch or transport ends, and that standard VAT rate is applied.
The declarant has an active role in the customs process and full responsibility to remit VAT previously collected from the customer to the tax/customs authorities, in a single payment by the 16th day of the month following the collection. Recording requirements also exist.
Is it really a simplification?
Greece has yet to complete the transposition of EU Council Directives 2017/2455 and 2019/1995 to its local VAT legislation, therefore, it is not clear how the existing framework will be affected by the new rules and whether current MOSS legislative gaps (e.g. lack of a regulated VAT refund process) will be reformed.
The Greek state should at least regulate:
The reporting and invoicing obligations to be respected by the involved non-EU and EU suppliers / deemed suppliers;
The joint and several liability of the underlying supplier;
The potential requirement for suppliers to appoint a tax representative to use the Union OSS and become liable to paying the corresponding VAT; The conditions to be imposed on intermediary taxable persons for IOSS use; and
The standard VAT rate for all goods declared under the special arrangements process for the authorisation of declarants.
Distance sellers should examine the above-mentioned special schemes and evaluate whether the new compliance requirements would result in a reduced burden, compared to the existing multiple VAT registration requirements per consuming member country.
Vasiliki Tzourmana
Manager, EY
E: vasiliki.tzourmana@gr.ey.com
