EU Ecommerce Vat Rate Rules
Removal of distance-selling thresholds EU distance selling thresholds are “removed” as of 1 July 2021.
Previously, this meant VAT only applied to intra-community distance sales if annual turnover was more than €35,000 for sales to most EU countries, or €100,000 per annum for Germany, the Netherlands and Luxembourg.
Removal of the threshold is a mandatory change that will affect any business carrying out intra-community distance sales, regardless of whether they use OSS ( One Stop Shop Accounting ) or otherwise.
“The existing thresholds for distance sales of goods within the EU will be abolished and replaced by a new EU-wide threshold of EUR 10 000. Below this EUR 10 000 threshold, the supplies of TBE (telecommunications, broadcasting and electronic) services and distance sales of goods within the EU may remain subject to VAT in the Member State where the taxable person is established.”
Source: https://ec.europa.eu/taxation_customs/business/vat/vat-e-commerce_en
Most ecommerce in Ireland has relied on these exemptions to push through all our EU sales as Irish sales and apply Irish VAT to them. However with these exemptions now gone you need to account for VAT separately for every EU country you sell to.
Administratively, the OSS will work in a very similar way to the existing MOSS scheme. The VAT rate of the destination country is charged at the point of sale, then reported and paid quarterly via an online portal. Domestic supplies within Ireland continue to be reported via the domestic VAT3 Return for Revenue.
It should be noted that the sales that can be reported through OSS will be subject to destination VAT regardless of whether OSS is used. In other words, OSS is intended to be a tax simplification. It means businesses can report and pay VAT for all B2C sales that are subject to destination VAT to all EU countries in one fell swoop.
Effectively this means you need to be able to calculate and charge VAT on the website differently for each country in the EU = 26 new VAT codes and rates. The relevant VAT code will need to be applied according to the country the goods are being shipped to. Most ecommerce platforms will have this included already as this is how ecommerce in the US is conducted, vat rates per state.
Your accounting software will need to accommodate the same kind of variable VAT rates for each country.
Sales to the United Kingdom are not included in this directive. See revenues note on exporting to the UK
If you are UK based ecommerce company then your exports to the UK will be subject to a vat charge on delivery to the customer.
EU State Vat Rates you will need to apply to your online store.
Remember Vat is calculated on the shipping destination.
Action Plan :
- July 1st update all vat rates for all EU countries on your website.
- Setup your accounting packages to cope with these new rates
- If you payment provider is calculating vat or displaying the breakdown to your customer make sure its correct.
- If your accounts package is linked to your ecommerce package then the new vat rates will need to be synchronised.
- Call your web developer before hand.
If you are selling to a VAT registered business in the EU you can waive the vat if :
- the customer is a business or company who charges vat to their customers
- provides a valid and verified vat number ( verify a EU vat number here )
- the vat number validity should be recorded and verified every 12 months
- in ecommerce these customers will typically be hand vetted and moved to a specific customer group.
- automatically exempting EU businesses is not recommended as invalid vat numbers will leave you liable to the vat in a vat audit
| List of VAT rates applied in EU member countries (last updated as of 1 January 2021) | |||||
| Member State | Country code | Standard rate | Reduced rate | Super reduced rate | Parking rate |
| Austria | AT | 20 | 10 / 13 | – | 13 |
| Belgium | BE | 21 | 6 / 12 | – | 12 |
| Bulgaria | BG | 20 | 9 | – | – |
| Cyprus | CY | 19 | 5 / 9 | – | – |
| Czechia | CZ | 21 | 10 / 15 | – | – |
| Germany | DE | 19 | 7 | – | – |
| Denmark | DK | 25 | – | – | – |
| Estonia | EE | 20 | 9 | – | – |
| Greece | EL | 24 | 6 / 13 | – | – |
| Spain | ES | 21 | 10 | 4 | – |
| Finland | FI | 24 | 10 / 14 | – | – |
| France | FR | 20 | 5.5 / 10 | 2.1 | – |
| Croatia | HR | 25 | 5 / 13 | – | – |
| Hungary | HU | 27 | 5 / 18 | – | – |
| Ireland | IE | 23 | 9 / 13.5 | 4.8 | 13.5 |
| Italy | IT | 22 | 5 / 10 | 4 | – |
| Lithuania | LT | 21 | 5 / 9 | – | – |
| Luxembourg | LU | 17 | 8 | 3 | 14 |
| Latvia | LV | 21 | 12 / 5 | – | – |
| Malta | MT | 18 | 5 / 7 | – | – |
| Netherlands | NL | 21 | 9 | – | – |
| Poland | PL | 23 | 5 / 8 | – | – |
| Portugal | PT | 23 | 6 / 13 | – | 13 |
| Romania | RO | 19 | 5 / 9 | – | – |
| Sweden | SE | 25 | 6 / 12 | – | – |
| Slovenia | SI | 22 | 9.5 | – | – |
| Slovakia | SK | 20 | 10 | – | – |
Disclaimer : We always advise you contact a qualified tax adviser for roll out and implementation. The information on this page is only a guide and links to the sources are contained. We do not offer tax advice on this site.