Starting from 1st July, 2021, multinational Online Marketplaces offering cross-border B2C sales of tangible goods are no longer required to register for VAT in each EU member state where it has customers. Under the new rules, online marketplaces will be able to centralise all their European VAT obligations in their home country, with one single registration. The marketplaces can then focus on expanding into new markets without worrying about registering for every local tax regime that applies to its activities across EU borders.
The main changes to the EU VAT rules are as follows:
One Stop Shop (OSS) Registration
VAT due on sales of tangible goods supplied by a marketplace retailer will be collected centrally by the marketplace rather than each individual business. The VAT is then paid over to member state tax authorities, along with details of the previous supply chain so that they can track down where it came from if it is not paid. Online marketplaces must register for VAT in their home country and must not carry out any verification or monitoring activities themselves. They will also need to provide information sharing systems so that member states can find out who sold what to whom. In return, online marketplaces will benefit from simpler procedures for allocating B2C VAT liability and can reduce costs. They will no longer need to register for VAT in every member state where they have customers – a so-called "One Stop Shop" registration requirement.
IOSS Registration
On the other hand, One Stop Shop (OSS number) will allow companies to register the VAT in only one of the EU member states from which they can report VAT for all of their EU sales made in multiple countries. The member state will act as the lead authority for all VAT returns and payments. The company will remain resident for VAT purposes in the member state where it is registered, but will be able to take advantage of OSS procedures (more flexible arrangements).
Registration Conditions: Online marketplaces that sell tangible goods must ensure that taxable transactions are declared through their home country Online Marketplace VAT registration. This is mandatory if there are more than ten sellers in the marketplace, regardless of the total value of the sales made by all individual sellers across all EU countries.
Online marketplaces can opt to register as an IOSS (i.e., choose a member state) and will benefit from:
-More flexible rules for VAT allocation.
-Simplified procedures for VAT return and payment.
-Do the business in all 27 EU member states with just one VAT registration
-- Enhance the customer experiences by providing transparent costs price .
The registrant must declare the value of all taxable B2C transactions to this member state, regardless of where the customer resides or how much tax is due in any other jurisdictions.
Online marketplaces are no longer required to be registered in every EU member state where they have customers. It improves administrative burdens for online marketplaces by allowing them to centralise all tax obligations in their home country, instead of registering in each individual member state where they have customers.
These changes will make it easier for small businesses to do business across borders without having to deal with 27 different VAT obligations！