EU moves new B2C VAT liabilities to marketplaces 2021
- Dec 13, 2018 | Richard Asquith
On 11 December, the European Commission published details of a new rule which would make large online marketplaces responsible for calculating, collecting and remitting VAT on certain B2C cross-border transactions below €150. Where goods are imported by an EU or non-EU merchant, and then sold via a marketplace in another EU country, the marketplace will become the deemed supplier, and take over the sales VAT settlement.
The change will spilt transactions facilitated by marketplaces where EU or non-EU merchants import and then move own stocks between EU countries, with a subsequent domestic B2C sale. It will also extend the transactions permitted to be reported through the 2021 planned extension of the One-Stop-Shop (OSS) VAT return to include imports and intra-community supplies. This will enable EU and non-EU merchants to report the relevant split transactions through a single VAT return and avoid the requirement to register in all countries where they hold stocks in multiple countries.
|Stages of B2C transaction||Current||2021|
|1. EU or non-EU merchant imports goods below €150
||Merchant pays import VAT. They may then: forego right to recover; reclaim through their OSS VAT return; or claim zero-rated onward relief||Merchant pays import VAT. They may then: forego right to recover; reclaim through their OSS VAT return; or claim zero-rated onward relief
|2. Merchant moves stock from one EU country to a storage warehouse in another EU country*
||Merchant must VAT register in destination EU country as a non-resident, and report intra-community supply of their own goods in the dispatch and arrival countries
||Merchant makes a zero-rated B2B sale to the marketplace in the country of dispatch. Reports intra-community supply through their OSS VAT return|
|3. Stock sold to consumer on a marketplace from warehouse as a domestic sale
||Merchant charges and collects local VAT, and remits with periodic VAT return to local tax authorities
||Marketplace makes domestic sale, collects and remits VAT to local tax authorities – this may be done through the new One Stop Shop or their regular domestic VAT return
* For non-EU merchants, distance selling without an initial import (EU-sourced goods), then the above split transactions (2. and 3.) will also apply.
The measure has been developed in consultation with the large marketplaces and member states. It will pass as an amendment to the EU VAT Directive 2006/112/EC (and Council Regulation 282/2011).
The proposals will be sent to Member States and the European Parliament for review. The Commission is aiming for a quick ratification in early 2019 for a January 2021 implementation.