New e-commerce VAT rules.

A newsletter has been issued by the Tax Department on the new VAT rules relating to cross-border e-commerce (business-to-consumer – B2C). The rules will enter into force from the 01st of July 2021. 

The new VAT e-commerce rules aim to put in place a simplified VAT system for businesses which provide services and/or sale of goods electronically to end consumers within the European Union (EU).  The scope of the Mini One Stop Shop (MOSS) will be extended to a One Stop Shop (OSS) which will include the provision of all services and the sale of goods to end consumers in the EU.   The businesses will be able to make use of the OSS to account for VAT in just one EU country thus avoiding the need to register in multiple countries within the EU.

In certain cases where a business is operating an electronic interface (marketplaces or platforms), the responsibility to account for VAT will be shifted to the business which is operating such an electronic interface.  This will be applicable in cases where there is a cross border sale of goods: (i) which are imported from a third country and the value of the goods does not exceed EUR 150, and/or (ii) irrespective of the value of the goods if the supplier who is subject to tax is not established within the EU. 

The new VAT e-commerce rules also introduce the Import One Stop Shop (IOSS).  The IOSS will allow  businesses, either from the EU or a third country (through an EU established intermediary), which sell from distance imported goods in the EU with a value up to EUR 150, to collect, declare and pay VAT to the tax authorities.  Where the business is using IOSS, which is not compulsory, VAT will be charged at the point of sale (the buyer will be charged VAT at the time of purchase thus avoiding customs clearance).  VAT will be charged on all goods which are being imported to the EU, abolishing the previous no VAT rule on goods which did not exceed the value of EUR 17.

The Tax Department is expected to provide additional information on the upcoming changes before the 01st of July 2021. 

For more information about the tax services that Elias Neocleous & Co LLC. can provide please contact Elena Christodoulou or Konstantinos Michail. Alternatively, you may speak with your usual contact within the firm who will be happy to assist.