Cyprus has issued guidance to EU and non-EU sellers and marketplace affected by the 1 July 2021 e-commerce package reforms. These seek to withdraw distance selling threshold, the €22 import VAT exemption and impose new VAT liabilities on certain marketplace transactions. To support this, and to make compliance easier and less expensive, new IOSS and OSS VAT reporting regimes are being introduced.
Reforms to improve EU e-commerce
Cyprus in its guidance outlines the new reforms:
For distance selling, where goods are sold across EU borders, the distance selling thresholds are being scrapped. Sellers will now have to charge the VAT rate of their customers’ EU country of residence.
To avoid the need to VAT register in each state, the EU is introducing the One-Stop Shop Return (OSS). This is an additional return which captures distance sells to all countries in a single filing. It can be completed in the EU jurisdiction of the seller. This is based on extending the existing MOSS One-Stop return for digital services. A range of other B2C services can be reported in the OSS too.
The ending of the €22 import VAT exemption will mean VAT is payable on all imported distance sales to consumers. The EU is now requiring import (or sales VAT) to be charged in the checkout at the time of sale online if the consignment does not exceed €150. The EU is launching a new return, Import One-Stop Shop.
VAT in the Digital Age to extend OSS return and reform IOSS
EU VAT in the Digital Age reforms include a channel for extending the OSS return to all B2C and B2C cross-border transactions.
by EU states. This grew from the 2020 EU Tax Action Plan proposals for a fairer and more efficient EU tax regime.
Update: reforms proposals to OSS and IOSS are being reviewed in a public consultation, with VAT Directive amendments due before the end of 2022.