In July 2021, new VAT rules for online shopping came into force. The new measures were designed to create a level playing field for all businesses. In the first six months of operation, a total of €6.8 billion in VAT revenues has been collected via the expanded One Stop Shop (OSS) portals. Almost €700 million represented new VAT revenue, equating to €1.4 billion annually, generated by the abolition of the VAT exemption that previously applied to imports of low value goods not exceeding €22 and which was highly susceptible to fraud. In addition to the above, an estimated additional €270 million in VAT was collected as a direct result of the import OSS’s capacity to counter fraud and VAT losses due to undervaluation.
The new VAT framework simplifies VAT compliance for intra-EU business to consumer e-commerce supplies and introduces more transparency for EU shoppers as regards pricing and consumer choice. The new framework should also ensure a fairer and simpler VAT system across the EU and should adapt the VAT system appropriately for the e-marketplace.
The introduction of the expanded OSS and the new Import One Stop Shop (“IOSS”) together allow businesses to declare and pay VAT on their intra-EU sales on good and services, and on imports of low value good into the EU. The initial indicators from the first six months of the new VAT package suggest a successful implementation. You can visit the VAT One Stop Shop for more information.
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