The European Commission proposes to delay the 2021 VAT e-commerce package and OSS to July 2021.
The European Commission has proposed that the implementation of the 2021 VAT e-commerce package, which was due to come into force on 1 January 2021, should be delayed until 1 July 2021 in light of the global Covid-19 pandemic. At this time, the European Parliament is yet to agree the new start date. The European Council will then ratify this.
The new VAT measures includes the expansion of the Mini One Stop Shop (MOSS). This currently applies to business-to-consumer (B2C) supplies of telecommunications, broadcasting and electronic (TBE) services in the EU. Under the new One Stop Shop (OSS), this will include the distance sale of goods and any other services supplied B2C in the EU. In addition, abolishing Member State distance selling thresholds. Instead replaced with a new €10,000 EU wide threshold.
Also included as part of the package is the abolishment of the €22 VAT exemption for the import of low value consignments; and the introduction of the Import One Stop Shop (IOSS) for non-EU businesses.
The transition period between the UK and EU is due to end on 31 December 2020. These new VAT measures offered e-commerce businesses selling goods some certainty in the way they could trade in a post Brexit era. However, with EU likely to delay OSS by 6 months, businesses will need to revisit their plans. Particularly in the event that there is no extension to the transition period between the UK and EU. Talks will continue over the coming months. However, based on the current position of the UK Government, even if there is a deal agreed, it is very likely that goods being sent from the UK to the EU will be an export from the UK and an import into the EU.
If you want further information on the OSS, please sign up to receive the Accordance Whitepaper here. To discuss how you may be affected by the delay to the 2021 VAT e-commerce package, please contact one of our VAT experts.