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EU agrees 2021 marketplace deemed supplier VAT


EU member states yesterday agreed to make online marketplaces responsible for charging and collecting VAT for their non-EU sellers in a bid to recover €5bn in VAT fraud.

The measure and directive changes were proposed last December by the European Commission (EC), and ECOFIN finance ministers agreed to it on 12 March 2019. Yesterday's agreement covered the implementation regulations. It will now pass to the European Parliament for what is expected to be clear passage for implementation on 1 January 2021.

Marketplaces become responsible for VAT collections

The agreement covers making online marketplaces the deemed supplier for VAT purposes, in the following cases for non-EU sellers using their platforms:

·     For goods up to a value of €150 sold on their platforms; and

·     For all goods sold on their platform where the seller uses fulfilment centres.

To facilitate this, non-EU sellers would be responsible for the import, and import VAT, and then perform a nil-rated sale to the marketplace where the goods are moved across an EU border. The marketplace would then perform the VAT-rated domestic sale to the customer. Non-EU sellers will be able to use the new OSS (see below) VAT return to recover import VAT.

To support the implementation of these measures, online platforms will also be expected to keep records of sales of goods or services made by businesses using their platforms.

2021 One-Stop-Shop single EU VAT return

The EU has already agreed to extend the One-Stop-Shop (OSS) single EU VAT return for all sellers (EU and non-EU) of goods to consumers from January 2021. 

Like the existing Mini One-Stop Shop (MOSS) for e-services sales to consumers, this will enable EU and non-EU sellers to report all their distance sales through a single return to their national tax authorities. This would end the requirement for multiple EU VAT returns for such e-commerce sellers, ending the need for the distance selling threshold simplification.  

The EC has said OSS will include the facility to reclaim import VAT suffered in any other EU state.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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