The European Commission amended VAT regulations allowing Member States to ready themselves for the introduction of the One Stop Shop (OSS); set to launch on 1 January 2021. The Commission expanded VAT rates published on their web portal.
Under existing rules, Member States may publish on the EU’s web portal the VAT rates for telecommunication, broadcasting and electronically supplied services (TBE services). These are subject to mini-one-stop-shop (MOSS) reporting. On the 1 January 2021, MOSS, which will become the OSS, expands to include distance sales of goods and other B2C supplies of services.
The OSS aims to simplify submitting VAT returns for online retailers in the various Member States where they trade. However, for supplies recorded in the existing MOSS the standard rate generally applies. The supplies to be recorded in the new OSS could be subject to a myriad of different rates. Therefore, the EC amended these regulations allowing Member States to publish VAT rates for all products on their website. This should help businesses.
However, it will be important to correctly interpret and then apply those rates to the different products sold. So this may not be as simple as first thought.
Businesses will know the VAT rates to apply in the Member States they already report in. However, they will now suddenly find themselves having to report VAT in countries where they were previously under the distance selling threshold. As a result, businesses need to review VAT rates in new countries. In addition, ensure they apply the correct ones. Whilst publishing the VAT rates will help with standard products, it will be those subject to interpretation that will be where the complexity becomes apparent.
Will the OSS introduction affect your business? Then contact our VAT experts to discuss how we can assist you.