International e-commerce becomes easier with simplified VAT payment within the EU
Written by Max Riis Christensen
On July 1st, 2021, the international VAT payment on business to consumer sales can be paid in your home country. The current local thresholds of export of goods via distance sales (e-commerce) will be replaced with an EU wide threshold of 10.000 EUR.
Currently, different member states have different thresholds for export (which vary from 25.000-100.000 EUR) and you need to report and pay VAT in each country you export to. These thresholds will be replaced with a combined threshold of 10.000 EUR for your total business to consumer export.
This will be accompanied by a new system for reporting VAT, which will simplify both VAT registration, reporting and payment. This system is called OSS (One Stop Shop) and is already active for companies selling digital services.
Main changes from July 1st, 2021:
- An EU export threshold of 10.000 EUR in total will be implemented
- After crossing the 10.000 EUR limit, all sales outside your home market must include the charge of the local VAT rate in the country
- A new system, OSS, will be available to pay the VAT in your home country and the local EU VAT authorities will settle the payment with their counterpart in the customers home country
How to pay VAT locally from July 1st, 2021:
- Either via OSS or via traditional VAT registrations/reporting, if you go with OSS it will change the VAT reporting in your home market as well
- Each EU country will have its own website where you should register, in Denmark you will find it here
- You can choose to continue to do as you do today, with individual registration, reporting and payment in each country
Prepare your shop and company for the new VAT rules
- Keep an eye on your total export to other member states, the new total limit is 10.000 EUR
- Decide on whether you will use OSS or traditional VAT registrations/reporting
- Align your systems and bookkeeping processes with your decisions
See examples scenarios below:
