The European Union introduced the E-Commerce VAT (Digital VAT) package on July 1, 2021. The adoption of the new pieces of legislation was seen as a necessary step to move forward with the digitalization of administrative processes on the EU level, establishing a digital apparatus that will make the business life of taxable persons operating in the EU easier, as well as it will make the battle with VAT fraudsters less complicated.
The E-Commerce package introduced an entirely new simplified tax reporting scheme called Import One-Stop Shop( or IOSS); it has also enlarged the scope of transactions that can be reported through the One-Stop Shop Union and non-Union scheme.
Along with expanding supplies that can be cumulatively reported via OSS schemes, the types of taxable persons who can benefit from them have also grown.
Two and half years have passed since the adoption of the e-Commerce package, and the results gathered from different credible sources unanimously show that it was, and still is, a massive success.
This can be concluded by many parameters, such as:
- Number of taxable persons registered to one or more OSS schemes;
- Reduced cases of non-compliance;
- Less bureaucracy for taxable persons and tax authorities;
- Faster and more efficient administrative cooperation between national tax authorities;
- Consistent decrease of the EU VAT Gap;
- Lower national VAT Gap in the Member States.
Special Schemes
One Stop Shop
EU VAT E-Commerce Package
| – Benefits of EU special schemes – Distinctions – Similarities – Potential | OSS Non-Union Scheme | OSS Union Scheme | Import One Stop Shop(IOSS) |
| Taxable person who can benefit from the scheme | Non-EU established | EU and Non-EU established | Non-EU and EU established |
| Types of supplies | B2C supplies of services to customers based in the EU | Depending on the residence and type of the supplier: 1. Intra-community B2C supplies of services 2. Intra-community distance sales of goods 3. Domestic B2C supplies of goods | Distance sales of imported goods from third countries or third territories, where the intrinsic value of the consignment is ≤ EUR 150 |
| Tax Representative or Intermediary | Not mandatory | Not mandatory | The intermediary is needed when the supplier isn’t established in the EU and his country of residence hasn’t signed a mutual assistance agreement with the EU |
| Invoicing obligation | The EU VAT Directive doesn’t impose this obligation. However, EU Member State may mandate the issuance of invoices per national rules. | As regards B2C supplies of services, the EU VAT Directive doesn’t impose an obligation for invoice issuance. Nonetheless, the national authorities have permission to mandate obligation for invoice issuance through domestic legislation. In regard to intra-Community distance sales of goods, the EU VAT Directive imposes an obligation for invoice issuance when the supplier isn’t registered as a user of the OSS Union scheme. | EU VAT Directive doesn’t obligate invoice issuance regarding the distance sales of imported goods in the EU. To consider that for B2C distance sales of imported goods, Member States can impose invoice issuance obligations. |
| Benefits | The non-EU established supplier can report all B2C services supplies where the place of taxable supply is within the EU via one particular scheme. | All three different groups of taxable persons who can adhere to this particular OSS scheme can aggregate all the transactions(permitted supplies) within one scheme and, through a simplified manner, declare and pay EU-wide VAT to the identified Member State using a specially designed web portal channel. | EU and non-EU taxable persons can report in a simplified manner distance supplies of low-value goods imported from third countries or third territories to final consumers based in the EU. The customer pays for the goods in question with VAT included. No custom bureaucracy challenges for the customer. The IOSS scheme can be used by EU and non-EU-established taxable persons and by Electronic Interfaces with EU and non-EU places of residence. |
| EU-established taxable persons can report: 1. intra- EU B2C supplies of services 2. Intra-community distance sales of goods | |||
| Non-EU established taxable person(not acting as a deemed supplier) can declare: 1. Intra-community distance sales of goods | |||
| Electronic Interface(EU as well as non-EU established) acting as deemed supplier can report: 1. Intra-community distance sales of goods 2. Specific domestic supplies of goods(exhaustive list) |
Aleksandar Delic
1stopVAT Senior Indirect Tax Researcher (Global Content)