EU 2021 ecommerce VAT package Intermediary
- Aug 13, 2020 | Richard Asquith
The EU plans to role out its ecommerce VAT package reforms on the 1 July 2021. This will include imposing the obligation on non-EU sellers and marketplaces to appoint a special VAT agent, an ‘Intermediary’. This is similar to a Fiscal Representative.
The key elements of the ecommerce package include:
- ending distance selling thresholds and introducing the One-Stop-Shop (OSS) single VAT return;
- withdrawing the €22 low value consignment VAT exemption and introducing the Import One Stop Shop (IOSS) return
- making marketplaces the VAT deemed supplier for certain transactions.
Intermediary for 2021 IOSS
EU and non-EU businesses may opt from 1 July 2021 to report EU import VAT on goods consignments not exceeding €135 via the new IOSS monthly filings. Non-EU established businesses must appoint an Intermediary to represent them and file (see below). The one exception to this rule is where the EU has concluded a VAT mutual assistance agreement with their home territory. To date, this has only been with Norway. The UK may follow after Brexit; but there are no near-term plans that we are aware of.
Joint liability on IOSS VAT only
The Intermediary must be an EU-established taxable person. They are jointly and severally liable for the reporting and payment of VAT under the Import Scheme. So sales outside of this regime are excluded. The authorities will likely initially pursue the Intermediary in the case of a default on VAT.
The member states have yet to define the limits of liability of Intermediaries, but we can expect them to reflect the ‘fiscal representative’ role in VAT.
Process for registering as an Intermediary
The Intermediary must first register with the tax office of their member state of residency. It will be granted a unique Intermediary identification number.
Registering the Intermediary’s sellers
The Intermediary then registers with the local tax office the details of every seller or marketplace it will be representing for the Import Scheme. The tax office will issue the Intermediary with a unique identification number for each seller. This will be a 12-digit code (details to follow).
If the seller changes Intermediary, then the unique identification number must be updated by the new Intermediary.
The seller will use the Intermediary’s IOSS number for customs declaration. The seller may be able to misuse this – gain customs clearance without any VAT being declared in the return. However, this would not be possible for more than a few months (see controls below).
The seller should produce a customer invoice declaring the VAT calculation. It is not clear if this has been mandated.
IOSS reporting, payments and controls on liabilities
IOSS reporting will be on a monthly basis. The deadline is the last day following the month after the reporting month. This will be in the country the Intermediary is established. The Intermediary must maintain extensive records of its sellers’ transactions and VAT calculations.
This will include a listing by country and VAT rate of the country (so calculations may be verified). This data is shared by the EU VAT authorities to verify and match against customs declarations with the IOSS number. In this way, tax authorities should be able to identify incorrect use of IOSS numbers. This should provide the Intermediary with some assurance on their liability. However, it will depend on the tax authorities acting on this information.