Since the 1st of July 2021, new value-added tax (VAT) rules are applicable within the European Union (EU). According to these new rules, below a threshold of 10.000 €, the VAT can be paid to the Member State where your business is located. Above this threshold, your business will be able to easily register in a One-Stop-Shop (OSS), where you can declare and pay the VAT due in the other Member States. As a consequence, if you register for OSS, you can now sell into all 27 EU Member States with just one VAT return. This might sound intimidating, but this article will help you navigate these new rules.
VAT is a multi-stage turnover tax, which is levied on the value-added at each stage of the production and sale. It is a cost that is generally borne by the end-consumer but is collected by the seller.
The OSS is an electronic system that simplifies up to 95 percent of VAT obligations throughout the EU. Since the rules are still relatively new, a general overview of the benefits follows, with additional areas of application likely to emerge in the future. However, the OSS allows your EU-based e-commerce business to:
Each EU Member State has an online OSS portal where your business can register (if headquartered in Germany: ELSTER). This single registration will be valid for all sales to consumers in the other EU Member States.
In order to use the OSS you have to:
If you choose to register for OSS, you should be aware of the following implications:
If you are thinking about the UK as a potential market for your e-commerce business, Hive is here to offer you a scalable software solution to support the expansion of your business!
Note: For more detailed information regarding the new EU VAT rules for e-commerce businesses please visit the relevant website of the European Commission.