Changes to EU VAT – what do you need to know?

16 April 2021

The second half of 2021 will bring several important changes in the area of value added tax (VAT). On July 1, 2021, the current VAT exemption for the import of goods to the European Union with a value not exceeding EUR 22, i.e. the so-called small shipments. Among the novelties, it is expected, inter alia, the possibility of declaring VAT for shipments with a value of up to 150 euro – on the basis of a special IOSS import procedure.

To apply for the zero rate for value added tax as part of the Intra-Community Supply of Goods (WDT), the buyer will be required to have, inter alia, correct and valid EU VAT number.

What are the reasons and who is affected by the changes in EU VAT?

Changes in the regulations regarding VAT allowances are part of the package for the e-commerce market and are intended, among others, to tax seals and improving the competitiveness of sellers associated in the EU structures. The new rules will directly affect e-commerce platforms outside the EU, such as the Chinese tycoon AliExpress, eBay or Amazon, which will no longer be able to benefit from the 0% VAT rate for low-value shipments (up to EUR 22).

All European Union member states have until June 30, 2021 to adapt their internal regulations to the EU VAT package for the e-commerce sector. This project envisages extending the currently functioning procedure in the field of MOSS VAT settlement and creating the so-called One-stop-shop (OSS) and the implementation of the Import One-stop-shop (IOSS).

April 1 this year The Ministry of Finance has launched the registration for the new EU and non-EU OSS procedure, as well as for the initiation of the IOSS import procedure. Thanks to the changes, it is easier to ship goods from Poland to customers from other EU countries. EU e-commerce companies will not be forced to register for VAT in the country to which they export goods. They will be able to settle the tax on goods and services in their country, thanks to the One Stop Shop (OSS).

Conditions of the WDT from 1 July 2021 year as the basis for the rate of 0 percent on VAT

In order to be able to benefit from the application of the zero VAT rate as part of the Intra-Community Supply of Goods, four conditions must be met simultaneously:

  • the delivery of goods must be made for a buyer who has a valid identification number for intra-EU transactions, issued by a given member state
  • the supplier should have confirmed in the documentation that the goods have been exported from the country and delivered to the buyer from the territory of another EU country
  • supplier must be registered as an EU VAT payer
  • supplier timely submitted a valid EU VAT summarizing information or appropriate explanation to the Head of the US in case of failure.

In a situation where even one of the conditions is not met, the taxpayer will be forced to apply the domestic VAT rate.

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