Online Electronic Interfaces

The VAT rules are changing, from 1st July 2021 the new EU e-commerce package switches the obligations to Electronic Interfaces in a huge VAT reform making marketplaces the deemed supplier on sales within the EU. 

An electronic interface (EI) should be understood as a broad concept. An EI could include a website, portal, gateway, marketplace, platform, application program interface (API).

How is a deemed supplier identified?

You are considered a deemed supplier if you facilitate the following;

• Distance sales of goods imported into the EU with a value not exceeding EUR 150 and/or
• Supplying goods to EU consumers of any value when the underlying supplier/seller is not established in the EU

When will you not be considered a deemed supplier?

An electronic interface is not considered a deemed supplier for the following transactions;

• Goods that are supplied in the EU of any value where the underlying supplier/seller is established in the EU
• Goods imported into the EU from NON-EU countries where the value exceeds EUR 150 regardless of where the seller is established

The diagram below taken from the European Commission will help you decide whether you are considered a deemed supplier.

Deemed Supplier Consequences

The deemed supplier model is that the electronic interface will now be treated for VAT purposes as if it is the actual supplier of the goods and will be liable to account for VAT on these sales. The electronic interface is considered to have received and supplied the goods meaning that the sale from the supplier selling goods via an electronic interface to the end-consumer is now split into two supplies as shown in the image below from the European commission.

Record Keeping Obligations

Under the new rules Electronic Interfaces are required to keep records for the transactions they facilitate regardless of if they are the deemed supplier or not. These records must be kept for 10 years and be electronically available when requested by any member state. take a look at the below figure given by the European union.