European VAT new rules for cross-border online sales made simple and easy

European VAT new rules for cross border online sales made simple and easy


Cross Border

New VAT rules will take effect on 1 July 2021 to offer businesses cross border the EU a simple and easy. These rules simplify the existing VAT obligations. It will reduce the administrative burden for businesses engaged in cross-border online sales. The aim is to:

  • ensure that VAT is paid where goods are consumed, or the services paid for are provided.
  • create a uniform VAT regime for cross border supplies of goods and services.
  • offer businesses a simple system to declare and pay register VAT in the EU. It will us the (Import) One-Stop Shop portal.
  • introduce a level playing field between EU businesses and non-EU sellers.

These rules will also help tackle the VAT Gap. Which is the difference between expected VAT revenues and VAT actually collected in each Member State. European commission provide  the information the overall EU VAT Gap. It’s slightly decrease €1 billion to €140.04 billion in 2018. The new VAT e-commerce rules will support efforts to reduce the figures. Even further and make the global digital transformation work for both people and businesses.


How can online businesses benefit from the new rules?

The EU has developed new VAT online tools. Where businesses can register and take care of their VAT obligations for all their sales in the EU. This replaces the previous system whereby online companies were oblige to register for VAT in each EU country. The new system should save EU businesses up to €2.3 billion a year in compliance costs.

As of 1 July 2021, businesses will able to electronically declare and pay the VAT for all their intra EU sales in a single quarterly return. All while working with the tax administration of their own Member State and in their own language. Even when their sales are cross-border. The new platform for businesses and taxable persons can use One-Stop Shop (OSS). It will help, how much VAT due on goods and services sold online throughout the EU. This system will reduce compliance costs by up to 95%.


VAT Services

Meanwhile, the Import One-Stop Shop (IOSS) facilitates the collection, declaration and payment of VAT for sellers that are supplying goods from outside the EU to customers in the EU. In practice, this means that these suppliers and electronic interfaces can collect, declare and directly pay the VAT to the tax authorities of their choice, rather than having the customer pay the import VAT at the time the goods are delivered to him. This makes life easier for the businesses, but also protects online shoppers from hidden costs.