EU VAT Reform (1st July 2021) - Sales within the EU

Created by Darren Stretch
Jun 27, 2021
2 min read

How VAT is handled for cross-border sales into the EU is changing on July 1st. In some ways it tax declaration easier for selling across the EU, but there are some changes you will need to make to get ready.

If you are a retailer who is domiciled within the EU your sales on Fruugo in the EU will change.

Changes

The changes for EU businesses is smaller for marketplace sales compared to non-EU businesses with the two key differences being:

  • The abolishment of the EU distance-selling thresholds set by each EU member country to instead use a single low EU wide sales threshold (10,000 EUR).

  • The VAT rate on the order will be calculated at the EU customers location, not the businesses location. For example, a DE business (without additional VAT registrations) selling to a PL customer would see the order previously calculated by DE tax rules, whereas now it will be PL tax rules.

What do you need to do?

EU businesses will be required to register and use the OSS (One Stop Shop) to report all their EU sales (marketplace and own activity) in their chosen registered country / domestic country.

There are further changes you may need to take into consideration and you should familiarise yourself with how the reform affects your sales within the EU. For example, if you are shipping from another EU country(s), different to your established business, you may still require a VAT registration in that country(s) to hold and distribute stock from that location.

If unsure we would advise you speak to your tax advisors for assistance.

Actions

You should ensure that your OSS registration is active and ready for July 1st to report all your EU sales. If you have not yet completed this process with your local tax office we would advise contacting them to ensure you complete this and are ready for the changes.

We would suggest speaking to your logistics provider to make sure that they are ready to support you from July 1st.

As the tax rate on your EU orders will change from your domestic VAT rate to the VAT rate of the customer it would also be prudent to test the whole process from order creation, via your order management system all the way to your label printer to make sure that each link in the chain is ready.

Contact

If you have any questions regarding the July 1st VAT changes, please email account.management@fruugo.com