Luxembourg: VAT modifications within the EU postponed to July 2021


Initially scheduled for January 1, 2021, modifications made by the EU to the VAT therapy of products and providers equipped to folks predominantly not topic to VAT have been postponed to July 1, 2021 as a result of world well being disaster.

These modifications intention to make sure taxation within the Member States of consumption which, for items, is mostly the state the place the products are made out there to the client and, for providers, the state of residence of the beneficiary. Additionally they impose obligations on digital platforms and lengthen using the “One Cease Store” (OSS) system for the fee of VAT.

E-commerce has elevated purchases of products from non-European suppliers, who escape the VAT usually due, with damaging results on the competitiveness of EU companies and the tax revenues of EU international locations. It has additionally strengthened the distortions inside the EU in favor of Member States making use of decrease VAT charges. The 2021 modifications intention to handle these points.

Buy of products exterior the EU

Items originating in non-EU international locations are taxed as imports by the EU member state the place they first enter (or within the member state the place they exit on the premise of a customs association ). From July 1, 2021, the “ distance promoting of imported items ” regime will exchange the regime for items valued at lower than € 150 ($ 172) with the exception, for instance, of products topic to duties. excise, corresponding to alcohol and tobacco. VAT will likely be due within the Member State the place the products are made out there to the client. Sellers won’t should register in all of the completely different Member States the place the products are made out there.

They may be capable to use the ‘One Cease Store for Imported Items’ (IOSS) system, which permits fee of VAT due in several Member States by way of a single digital declaration filed in a single Member State with out the prices of a number of registrations. VAT. . An analogous system has been used for a number of years by suppliers of cross-border telecommunications, broadcasting and digital providers. As well as, the exemption for low worth items (€ 22 or much less) will likely be eliminated because it constitutes a considerable supply of fraud.

Legal responsibility of digital platforms

To make sure the efficient fee of VAT due in accordance with the principles, digital platforms that “ facilitate ” distance gross sales of products imported on consignment with an intrinsic worth of lower than € 150 will, from July 1, 2021, be accountable VAT due on these transactions. “ Facilitate ” means to permit a vendor and a purchaser to contact and execute a sale of products, however excludes conditions the place platform intervention is restricted, corresponding to buyer rerouting to a different platform or fee administration.

The identical obligation will apply the place digital platforms facilitate the sale of products made within the EU by sellers established exterior the EU, whatever the worth of the products.

Cross-border sale of products within the EU

The particular “distance promoting” regime is relevant to items bought to non-taxable individuals and to sure classes of taxable individuals established in a Member State aside from the vendor’s State if the products are transported by or on behalf of the vendor. On this regime, the vendor should register and bill native VAT within the Member State the place the products are made out there to the client when the vendor’s gross sales exceed a threshold set in every State (usually € 35,000 per 12 months).

From July 1, 2021, the nationwide thresholds will likely be changed by a single EU threshold of € 10,000 for distance gross sales of products and providers throughout borders, thus eliminating the VAT benefit for sellers established in Member States making use of decrease VAT charges. The OSS will likely be out there to pay the VAT as a result of every Member State, thus eliminating the necessity for a number of VAT registrations.

Provision of cross-border providers from the EU

Below present VAT guidelines, in a business-to-consumer (B2C) framework, service suppliers could also be required to register in different Member States as a result of their providers are taxable in a Member State aside from that the place they’re established. That is the case, for instance, of providers linked to actual property (location of the property); sports activities, bodily coaching and comparable actions (place of bodily efficiency); or the rental of technique of transport (place the place the technique of transport is made out there).

From July 1, 2021, in such conditions, service suppliers will be capable to use OSS to remit owed VAT to native VAT authorities as an alternative of getting to register for VAT.

The businesses involved profit from an sudden six-month delay. They need to benefit from this time to find out the impression of those VAT measures and take all needed measures.

Christian Deglas

T: +352 45 145 2611

Michel lambion

T: +352 451 453 993

Eric Reolon

T: +352 45145 3677

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