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Marketplaces deemed supplier for EU sellers’ VAT on goods 2025 – VAT in the Digital Age

ViDA reforms extends electronic interfaces’ deemed supplier obligations to included EU sellers’ goods sales.

Follows Jul 2021 obligations on non-EU merchants’ sales

May 2023 update: The EC has proposed ending the €150 VAT threshold on consignment stocks from March 2028.

Marketplaces, or ‘electronic interfaces’ are set to become responsible for their EU-resident sellers’ B2C goods transactions from 1 January 2025 as part of the EU VAT in the Digital Age reforms package. This levels the playing field with non-EU sellers’ transactions will have been the marketplaces’ responsibility for VAT invoicing and collections since 1 July 2021.  The changes apply to EU and non-EU resident marketplaces.

Currently, marketplaces are only responsible for EU sellers’ imported B2C sales where the consignment intrinsic value did not exceeding €150.  Whereas the marketplaces are currently also responsible for the VAT collections on non-EU sellers’ sales within the EU irrespective of the value of the sale. It is this latter scenario that is being extended to EU sellers’ transactions from 2025. Aside from additional VAT obligations (see below) this will mean further marketplace OSS record keeping obligations, too.

Our VAT Calculator tax engine can provide instant e-commerce sales calculations for your checkout, and VAT Calc’s single platform  VAT Filer  can accurately complete the IOSS with verified transactional data.

What is a facilitating marketplace for EU VAT?

The EU defines marketplaces as electronic interfaces, which covers online marketplaces, portals, platforms or similar electronic means for sellers and buyers to meet and conduct transactions. When determining if the electronic interface facilitates a seller’s transaction and therefore triggers the VAT deemed supplier obligations, all of the following three criteria should be met:

  1. Electronic interface sets the contractual terms & conditions
  2. It authorises the request for payment from the customer
  3. It orders or delivers the goods

However, where the marketplace only takes on any of the following roles, then it is not a deemed transaction:

  1. Listing or advertising goods
  2. Payment processing
  3. Redirects to other sites for the transactions to be executed

Effecting the deemed supplier marketplace transaction

The marketplace must undertake two transactions to effect the deemed supplier procees – between the seller and then the customer:

  1. Zero-rated sale from seller to marketplace: if import (1. Above) then outside of the scope of EU VAT so zero-rated. If EU sales (2. Above) zero-rated with right to deduct sale from seller to marketplace.
  2. Local VAT sale by marketplace to consumer, based on country of residency of the consumer. The VAT collected is then due to the tax authorities.

Digital services and deemed supplier

In addition to goods, marketplaces are today treated as the VAT deemed supplier on all of their third-party sellers’ sales to digital services to EU consumers. In this case, the marketplace may opt to use the Union OSS return, as above. NOTE: non-EU sellers non-Union OSS should be used if the marketplace is not resident in the EU.

Non-EU marketplaces

Marketplaces not resident in any EU member state are equally liable for the deemed supplier rules. They too can use the OSS and IOSS return, including the non-Union OSS. They will have to appoint an IOSS Intermediary (Fiscal Representative) for the IOSS only.

IOSS and OSS record-keeping obligations

Since July 2021, EU imposed on EU and non-EU marketplaces detailed record-keeping obligations to support their use of the IOSS and OSS Special Schemes. In addition to master data on their sellers, they must maintain detailed transactional data for at least ten years.

You may read more about how marketplaces use IOSS here.

July 2021 – Non-EU sellers transactions marketplace VAT obligations

As part of the 1 July 2021 EU e-commerce reform package, online platforms (electronic interface) now take on the VAT obligations of certain transaction of their third-party sellers. Although their remains a Special Arrangements loophole.

2021 e-commmerce package – marketplace take on their sellers’ EU VAT obligations

In an effort to reduce VAT fraud and simplify the VAT compliance burden for sellers and the tax authorities, the EU shifted from 1 July 2021 certain VAT collection and reporting obligations from sellers to a facilitating marketplaces. This will cover EU and non-EU marketplace transactions where:

  1. Imported sales from outside the EU to EU consumers of consignments where the intrinsic value did not exceeding €150; and
  2. Sales of any value by non-EU sellers on marketplaces when the goods were already in the EU at the time of sale.

In the above two cases, the marketplace will first buy the goods from the seller at zero-VAT, and then immediately sale the goods to the seller’s customer with the VAT rate of the customer’s country of residence. The marketplace must then report and pay the VAT to the appropriate member state of the consumer. This may be done via

  1. Import One-Stop Shop IOSS return for imports consignments not above €150; and
  2. One-Stop Shop OSS return for sales of goods within the EU

Marketplaces also face new e-commerce VAT invoice requirements if they use OSS or IOSS.

Special Arrangements exception

Marketplaces do however have the option to avoid the new rules. Instead, they may pass the obligations for VAT collections and reporting to postal services and customs agents. This is the so-called Special Arrangements. However, the EC is proposing that marketplaces must use the IOSS from January 2025.

EU VAT reforms

Reform (click for details) Update
Contact VATCalc to learn how our single VAT determination, reporting and e-invoicing platform can help you manage and thrive with global compliance change
2030? Digital Reporting Requirements and e-invoicing harmonisation Delayed from 2028
Structured e-invoices supercede paper invoices Delayed from 2028
EC Sales lists replaced by Digital Reporting Requirements Delayed from 2028
2028 EU Customs reforms Published May 2023
€150 import consignment threshold removed Published May 2023
2026 DAC8 harmonised crypto asset reporting Approved May 2023
2025 Single VAT Registration in the EU - extension of OSS Potential delay to 2026
Marketplace deemed supplier extended to EU sellers Potential delay to 2026
Proposal for VAT treatment of the platform economy Potential delay to 2026
EU IOSS mandated for marketplaces Potential delay to 2026
Call-off stock VAT simplification ends Potential delay to 2026
Harmonisation of B2B Reverse Charge rules Potential delay to 2026
VAT registration thresholds equivalence foreign businesses On track
Virtual events VAT rule changes Agreed
2024 Payment providers' seller transaction reporting and bookkeeping obligations On track
Financial Services VAT exemption reform proposals Consultation complete; proposal 2023
Tour operator margin scheme VAT reforms EC undertaking fresh review
2023 DAC 7 - marketplace reporting harmonisation On track
2022 IOSS reforms to prevent double taxation Proposals early 2022
EU reduced VAT rate freedoms Enter into force 6 April 2022
VAT in the Digital Age proposals Published Dec 2022
EU DAC8 cryptocurrency tax reporting proposals Published Dec 2022
VAT Gap Initiative Q3 2022
EU Definitive VAT System On hold
2021 One-Stop-Shop (OSS) single EU VAT return In effect since 1 July 2021
Ending €22 import VAT exemption; new IOSS return In effect since 1 July 2021
Marketplace deemed supplier EU VAT reforms In effect since 1 July 2021
2020 EU four Quick Fixes for VAT In effect
Tax authorities anti-VAT fraud cooperation In effect
Tax Action Plan - 25 VAT and other tax reforms roadmap See 'VAT in the Digital Age' and others
2019 Simplification of e-services VAT compliance and thresholds In effect
Single and multi-use vouchers In effect
2018 Lower e-book and publications VAT rates In effect, although not all EU states have adopted the option

 

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