The rules change for electronic commerce as of July 1, the date on which the new rules on Value Added Tax (VAT) for online purchases. Now, any order that comes from a country outside the European Union (EU), whatever its amount, will have to pay for it. How will it affect consumers? Will it be more expensive to buy online?
Specifically, with the start of the seventh month of the year, various aspects of the application of VAT to online sales will be modified, regardless of whether consumers buy from merchants inside or outside the EU. Until now, goods with a value less than 22 euros imported by non-EU companies were exempt from VAT. And this changes. This exemption is abolished so that VAT is applied to all goods entering the EU, as in the case of goods sold by EU companies.
The European Comission considers, based on the studies carried out and the experience gained, that this exemption is being abused, since "unscrupulous sellers from outside the EU mislead shipments of goods to benefit from the exemption. This loophole allows these companies to remove advantage over its competitors in the EU and costs EU public finances around € 7 billion per year due to fraud, which increases the tax burden for other taxpayers, "he says.
Another change has to do with e-commerce sellers, who until now had to have their VAT number in each Member State in which they have a turnover greater than a certain global threshold, which varies from country to country. other. As of July 1, these different thresholds will be replaced by a common EU threshold of € 10,000, above which VAT must be paid in the Member State where the goods are delivered.
To simplify life for these companies and make it easier for them to sell in other Member States, online sellers can register on an electronic portal called "One Stop Shop", where they can comply with all their VAT obligations. for your sales throughout the EU. As they explain, "instead of facing cumbersome procedures in other countries, they can register in their own Member State and in their own language. Once registered, the retailer can declare and pay the VAT corresponding to all your sales in the EU by means of a quarterly declaration presented through the single window. This will be in charge of transmitting the VAT to the corresponding Member State ".
END TO ADDITIONAL PAYMENTS
With regard to consumers, "this provides much more transparency," says the European Commission, since when buying from a non-EU seller or platform registered in the one-stop shop VAT must be included in the price paid to the seller, which will put an end to requests from customs or courier companies that request an additional payment upon arrival of the goods to the country of residence, since VAT will have already been paid.
"While the new rules fundamentally modify the treatment that EU online companies give to VAT, they will bring innumerable benefits by facilitating business activity, reduce fraud and improve consumer experiences for online shoppers in the EU, "says the European Commission, highlighting the boom in online shopping, which has transformed retail across the world, trend that has accelerated during the pandemic.
In addition, they detail that this novelty is part of the context of efforts aimed at guaranteeing more equitable conditions of competition for all businesses, simplify cross-border e-commerce and introduce greater transparency for EU buyers when it comes to pricing and free choice. "The EU VAT system was last updated in 1993 and has not kept pace with the boom in international e-commerce, which has transformed the retail sector in recent years," they say from Brussels. In addition, the Covid-19 pandemic has also confirmed the need for a reform to ensure that the VAT due on online sales is credited to the consumer's country.
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