With effect from 01 July 2021, of the rules regulating e-commerce business have been amended to tackle challenges arising from the “old” VAT regimes for distance sales of goods.

The changes introduce the One Stop Shop regime (distinguishing between Union and non-Union schemes) which effectively extend the application of the Mini One-Stop Shop to the following transactions:

  • Intra-Community distance sales of goods carried out by suppliers or deemed suppliers
  • Domestic sales of goods by deemed suppliers
  • Supplies of services by a taxable person not established within the EU or by taxable person established within the EU but not in the Member State of consumption to non-taxable persons.

What is the Union One-Stop Shop (“OSS”) and what is its purpose?

The Union OSS is an electronic portal, used by businesses to comply with their VAT obligations on e-commerce activities within the European Union (“EU”). It allows them to:

  • Register for VAT electronically in one Member State for all intra-EU distance sales of goods
  • Register for VAT electronically in one Member State for B2C supplies of services taking place in another Member State
  • Declare and pay VAT due on all supplies of goods and services in a single electronic quarterly return
  • Electronic interfaces which become deemed suppliers for supplies of goods within the EU can use the Union Scheme to declare intra-Community distance sales of goods as well as certain domestic supplies of goods.

Who can use the Union OSS?

  • A taxable person established in the EU (who is not a deemed supplier) to declare and pay VAT for supplies of B2C services taking place in a Member State in which he is not established and intra-Community distance sales of goods
  • A taxable person not established in the EU to declare and pay VAT for intra-Community distance sales of goods
  • An electronic interface, established in the EU or outside the EU, facilitating supplies of goods (deemed supplier) for intra-Community distance sales of goods and certain domestic supplies of goods

How to register for the Union OSS?

Each EU Member State has an online OSS portal where businesses can register and use the OSS portal for transactions made on or after 01 July 2021. The OSS registration is valid for all eligible supplies made by online sellers, including electronic interfaces or supplies facilitated by electronic interfaces.

What is the purpose of the Non-Union Scheme OSS?

The new rules apply to all services supplied by businesses established outside of the EU to non-taxable persons established in the EU, where the place of supply is in a particular Member State.

Such businesses, which effectively have a registration obligation in the Member States where their supplies of services take place may alternatively use the OSS (Non-Union Scheme) to declare and pay the VAT collected for different Member States in one single Member State.

Who can use the Non-Union Scheme?

The Non-Union Scheme may exclusively be used by taxable persons not established in the EU which provide B2C supplies of services taking place in the EU.

Examples of supplies of services to customers (a non-exhaustive list) that could be reported under the Non-Union Scheme are:

  • Accommodation services carried out by non-established taxable persons
  • Admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events, such as fairs and exhibitions
  • Transport services
  • Services of valuation and work on movable tangible property
  • Ancillary transport activities such as loading, unloading, handling or similar activities
  • Services connected to immovable property
  • Hiring of means of transport
  • Supply of restaurant and catering services for consumption on board ships, aircraft or trains.

 

Overview of changes to the special schemes as of 01 July 2021

  Non-Eu Established Taxable Person/Supplier EU established person/supplier taxable
Transaction Special Scheme Special Scheme
Supplies of B2C Services Non-Union OSS Scheme Union OSS Scheme
Intra-Community distance sales of goods Union OSS Scheme Union OSS Scheme
Domestic supplies by EI Union OSS Scheme Union OSS Scheme

Matthew Zampa

Partner

Brandon Gatt

Indirect Taxation Manager

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