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New VAT rules for e-commerce

New Value-Added Tax rules for online shopping are in force as of 1 July 2021 as part of efforts to ensure a level playing field for all businesses, to simplify cross-border e-commerce and to introduce greater transparency for EU shoppers when it comes to pricing and consumer choice.

The VAT rules on cross-border business-to-consumer (B2C) e-commerce activities have changed throughout the EU. 

Even though the relevant legislation has not been voted from the Cyprus Parliament yet, these changes apply in Cyprus as of 1 July 2021, based on the EU Directive 2006/112/EC.

The main objective of these changes is to overcome the barriers arising in respect to cross-border online sales. In particular, the changes aim to:

  • Reduce the administrative burden of multiple VAT registrations
  • Apply the same VAT rate for goods, irrespective if purchased from inside or outside the EU
  • Simplify the measures for distance sales of imported goods regarding low value consignments

Main changes
 

  • Online sellers (including online marketplaces/platforms) can register in one EU Member State for the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to customers within the EU, through the new One Stop Shop (OSS).
  • Existing thresholds for distance sales of goods within the EU are abolished and a new EU-wide threshold of EUR 10.000 has been introduced. Below this threshold, the supplies of telecommunications, broadcasting and electronic services, and distance sales of goods within the EU, are subject to VAT in the Member State where the taxable person (i.e. the supplier) is established.
  • Online marketplaces/platforms facilitating supplies of goods are deemed for VAT purposes to have received and supplied the goods themselves (“deemed supplier”).
  • The VAT exemption applicable so far on importation of small consignments of a value up to EUR 22 (in Cyprus EUR 17) is abolished. All goods imported in EU/Cyprus are now subject to VAT.
  • A new special scheme, the Import One Stop Shop (IOSS) has been introduced, regarding distance sales of low value goods imported from third territories or third countries to simplify the declaration and payment of VAT. 
  • Introduction of simplification measures for distance sales of imported goods in consignments not exceeding EUR 150, in cases where the IOSS is not used.

The transactions covered by the new rules are the following:

What your next steps should be


If you are a distance seller (or marketplace) inside or outside the EU and you are supplying or facilitating supplies to customers within the EU, you should assess the impact of the e-commerce VAT package on your operations.

Assess the impact of the e-commerce VAT package on your operations in terms of:

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