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New regulations could mean big changes to VAT for ecommerce sellers 2021

EU VAT Reforms

On the 1st January 2021, new rules are due to come into force in the European Union regarding VAT, and particularly as it applies to ecommerce sales. Although there remains a chance that the implementation of these regulations could be delayed, it is worth considering what the impact could be for Swiss sellers now just to be prepared.

VAT

The biggest difference for those exporting into the EU is likely to be the removal of low value relief. Currently, goods with a value of under €22 exported to the EU are exempt from import VAT - which places sellers of low value goods inside the EU at a disadvantage - and of course has led to instances of what we could call creative package labeling by some merchants.

This will mean many, many more consignments subject to VAT - but to avoid a jam of parcels at the border, merchants will now be able to report and pay VAT electronically through the so-called “Import One-Stop-Shop” VAT return.

Online marketplaces and VAT – who is responsible?

Another pillar of the reform will affect those who sell their goods through online marketplaces such as Amazon. For goods with a value of under €150 imported from outside the EU, the marketplace itself will become liable for the collection and payment of VAT on behalf of the merchant. With this VAT paid by the merchant, the goods can then be imported free of further VAT.

The third pillar of the legislation applies only to consumer goods sold from one EU country to another - from January, these will become taxable for VAT purposes in the country of destination, and VAT will be payable using the so-called Mini-One-Stop-Shop (MOSS) system. This should also reduce the number of VAT registrations required by some EU businesses, but it is unlikely to have much impact on Swiss companies importing into the bloc.

KEY POINTS

  • New regulations from January 2021 remove the €22 threshold for import VAT.
  • VAT will also be simplified when selling goods worth under €150 through marketplaces.
  • However - there remains a chance that this legislation will be delayed.

About the author

Alan Rhode is the co-founder of TaxMen, a one-stop-shop legal and taxation consultancy for ecommerce vendors in Europe, offering advice and solutions with regard to VAT, customs and duty and environmental regulations on a flat-fee basis. He also advises Ecommerce Europe on matters relating to EU taxation, and is the co-founder of online wine vendor Libiamo.

Opening up new markets thanks to e-commerce

Switzerland Global Enterprise (S-GE) supports Swiss SMEs in their international business. We provide Swiss SMEs with information, services and contacts for their entire internationalization process, together with a unique network of national and global partners. If you have any questions in the area of e-commerce, our team at ExportHe/en/contact/export-helplp will be happy to assist you.

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