Online sellers will be affected by the new rules the most with a number of changes happening to the way their VAT obligations are dealt with and they way certain sales and VAT is accounted for. There are two large changes affecting sellers which we will discuss below.
New EU-wide threshold
The existing annual sales thresholds for EU member states will be abolished, these range from EUR 35,000 or 100,000 depending on the Member State. This will be replaced with a new EU-wide threshold of EUR 10,000 meaning once your sales hit or exceed this, you will have to VAT register in each member state you sell to. This can be avoided by registering for the One Stop Shop (OSS).
Below the threshold you can continue to apply the domestic rules for VAT on your cross-border sales.
Low Consignment Value Exemption Removed
The VAT exemption on importation of goods where the value does not exceed EUR 22 will be removed meaning all goods imported into the EU will be subject to VAT.
The newly created Import One Stop Shop (IOSS) was created to facilitate and simplify the declaration and payment of VAT for distance sales of goods which are imported into the EU when the intrinsic value does not exceed EUR 150. By registering for the IOSS your customers will pay the final price on your website with VAT included and no additional hidden charges or fees.
This allows for a much smoother transaction and ultimately happier customer knowing that what they see is what they get and the delivery process due to the simplified customs procedures by using IOSS will be faster.