E-commerce package: Value added tax changes from 1 July 2021

1. Mail order sales via electronic platforms

If an entrepreneur supports

• import mail order transactions (see below) where the individual value of the goods per shipment does not exceed 150 euros, or
• deliveries within the EU by an entrepreneur who neither operates his business nor maintains a permanent establishment in the EU to a non-entrepreneur,

through the use of electronic interfaces such as online platforms, marketplaces or portals, this entrepreneur (operator of the interface) is treated as if he had acquired the goods himself and delivered them on in his own name. The operator of the interface thus becomes a tax debtor himself and has to comply with corresponding reporting and recording obligations.

2. Abolition of the delivery threshold for mail order transactions

As of July 1, 2021, the delivery threshold of EUR 35,000 for intra-Community mail order sales to private customers and so-called threshold acquirers in Austria will no longer apply. Mail order sales are therefore subject to VAT in the country of destination from the first cent. To avoid VAT registration in the respective country of destination, the entrepreneur can make use of the extended EU-OSS special regulation (see below).

Exempt from the new regulation are microentrepreneurs whose total turnover with mail order and telecommunications, television and radio broadcasting services as well as electronic services to non-entrepreneurs in other EU countries does not exceed 10,000 euros, neither in the previous nor in the current calendar year. In this case, taxation takes place at the place of business, i.e. in the respective country of residence.

Due to the EU-wide implementation, the delivery thresholds also do not apply in all other EU countries. Austrian entrepreneurs (with the exception of micro-entrepreneurs) must therefore charge the VAT of the country of destination for mail order deliveries to private customers or threshold purchasers in other EU countries from 1 July 2021. The VAT can be deducted via the EU OSS.

3. Innovations in the import mail order business

In the case of goods deliveries from a third country, in addition to the import VAT within the EU, VAT may also be payable on the basis of the import mail order regulation. As of 1 July 2021, there is a special delivery location provision for the so-called import mail order trade, which are mail order deliveries from the third country to private buyers or so-called threshold buyers. Deliveries of new vehicles or deliveries of excisable goods to non-entrepreneurs who are not legal entities are NOT covered by the regulation for import mail order sales.

The place of delivery in the case of import-dispatch trade is at the place where the movement of goods ends (country of destination). This rule applies in two cases:  

• The place of performance in the case of import-dispatch trade is in the country of destination, if the goods are imported in another EU member state than the one in which the transport of the goods ends.
• The place of performance for import distance sales is also in the country of destination if the company makes use of the special regulation for the IOSS (see below). However, only import mail order sales for which the value per shipment does not exceed 150 euros can be declared via the IOSS. The individual value per shipment is measured by the price actually spent, excluding transport and insurance costs (unless these are included in the price). 

If the special regulation is used and the IOSS number to be issued for this purpose is indicated at the latest when the import customs declaration is submitted, the import is tax-free for the mail order company (the recipient of the goods does not have to pay import VAT either), otherwise import VAT is due from the first cent. The tax-free import of goods with a total value of less than 22 Euros will cease as of July 1, 2021.

4. Extension of the previous One-Stop-Shop procedure (OSS)

The OSS offers entrepreneurs, under certain conditions, the possibility to register in an EU Member State (Member State of Identification = MSI) and to declare all transactions covered by the respective special scheme in that Member State and to pay the VAT due thereon jointly. If the entrepreneur makes use of the OSS, the obligation to register for VAT purposes for the provision of certain transactions in the EU in each Member State in which he provides such transactions does not apply.

Due to the e-commerce package, there will be an extension of the previous mini-one-stop store procedure (MOSS). From July 1, 2021, there will therefore be three different procedures, depending on the service provided and the taxable person's place of residence:

• Import-One-Stop-Shop (IOSS) - NEW as of July 1, 2021

Traders making import mail order sales of third country goods into the Community territory may - under certain conditions - choose to be registered in only one Member State and declare and pay the tax there via the Import-One-Stop-Shop (IOSS) from July 1, 2021. VAT will be forwarded via the IOSS to the respective member states where the tax is due. Affected are import mail order sales where the individual value per shipment does not exceed 150 Euros.

The IOSS is available to the following entrepreneurs with import mail order sales:

• Entrepreneurs who have their business or a permanent establishment in the Community territory
• Entrepreneurs who are represented by an IOSS representative

The special regulation comes into force on July 1, 2021 and is applicable for the first time to supplies for which payment is accepted after June 30, 2021.

For EU companies, registration takes place in the Member State in which the registered office of the economic activity is located. If the registered office of the economic activity is located in a third country, registration takes place in that Member State in which a permanent establishment exists. Third country companies that have neither a registered office nor a permanent establishment can only register in the Member State where their IOSS representative is registered.

• EU-One-Stop-Shop (EU-OSS) – previously EU-Mini-One-Stop-Shop (EU-MOSS)

In principle, both EU and non-EU companies can register for the EU-OSS (non-EU companies can only register for deliveries), provided they have the corresponding sales. For EU companies, registration takes place in the Member State in which the registered office of the economic activity is located. If the registered office of the economic activity is in a third country, registration takes place in the Member State in which a permanent establishment is located. If this company has another permanent establishment within the EU, it can choose in which of the permanent establishment states it registers. 

All sales covered by the EU-OSS must then be declared via the EU-OSS from 01.07.2021 and registration in the Member State of destination is not required.

The EU-OSS can be used for the following sales as of July 1, 2021:

• All other supplies to non-entrepreneurs which are carried out in a Member State in which the entrepreneur has neither the seat of the economic activity nor a permanent establishment
• Intra-Community mail order supplies
• Intra-community supplies of a platform, the beginning and end of which are in the same Member State and for which the platform is liable to pay tax

Until June 30, 2021, only electronically supplied other services, telecommunication, television and radio services supplied to non-entrepreneurs resident in the EU can be declared via EU-OSS (previously MOSS). As of July 1, 2021, the MOSS will become the EU-OSS. If a company was already registered to the MOSS before July 1, 2021, the registration will remain valid after that date. 

Third-country traders who neither operate their business nor have a permanent establishment in the Community territory can only use the EU-OSS for intra-Community mail order transactions - or as a platform also for domestic deliveries (for other services, the non-EU-OSS is available, see below).

• Non-EU-One-Stop-Shop (Non-EU-OSS) – previously Non-EU-Mini-One-Stop-Shop (Non-EU-MOSS)

The previously existing special regulation for telecommunications, radio and television services will be extended from July 1, 2021 to all other services that an entrepreneur established in a third country provides to non-entrepreneurs (B2C) in the EU area.

Under the non-EU OSS, the third-country trader must register in only one Member State (EU VAT number) and declare and pay VAT there.

Both the new special regulation of the EU-OSS as well as the non-EU-OSS will come into force on July 1, 2021 and are to be applied for the first time to sales and other transactions that are carried out or occur after June 30, 2021.

Pre-registration for all procedures has been possible via Finanzonline since 1 April 2021.

You still have questions? Our expert Claudia Modarressy will be happy to support you.