This document summarizes changes to EU VAT rules taking effect in 2021, including: - Abolishing the VAT exemption for goods under €22, with VAT now due on the first €0.01 of value. - Introducing the Import One Stop Shop (I-OSS) for goods valued up to €150, allowing simplified customs and VAT payment in the country of registration. - If I-OSS is not used, transport companies must report imports and pay VAT under the "Fall Back" method, applying the standard VAT rate even if a reduced rate normally applies. - Non-EU suppliers will face destination VAT on all imports as of €0.01, while EU suppliers can charge

1. 2021
De Minimis Exemption
Presented by:
René Schilder (Focus on VAT)

2. • Customs and VAT consultancy
• Tax lawyers and Compliance team
• Amsterdam (the Netherlands) and Brussels (Belgium)
• VAT Fiscal representation: limited and general scenario
• EU coverage
• Over 400 e-commerce clients
WHO WE ARE

3. 2021: What happens (1)
• VAT exemption for goods < € 22 abolished
• VAT due as of first € 0,01
• Introduction of the I-OSS (Import One Stop Shop) for goods with an intrinsic value not more than € 150
Conditions for I-OSS registration
– No infringement of customs legislation
– No criminal offences
– High level of control over operations and flow of goods (customs + tax control)
– Financial solvency
– Registration (and possible audit) in one EU country, applicable in all countries

4. 2021: What happens (2)
• Result I-OSS registration
– supplier gets specific I-OSS VAT number in the EU country of identification
– Simplified customs clearance procedure
– when number provided to EU Customs: import VAT exemption. No VAT due when parcels are cleared
– however, supplier must periodically report and pay the VAT that is applicable in EU country of destination
– No local thresholds anymore, destination VAT becomes due immediately
• Non-EU companies can
– appoint a local fiscal representative to file the returns, or
– become I-OSS registered and file themselves

5. What happens (3)
• No I-OSS for goods with intrinsic value > € 150
– No simplified customs clearance procedure
– Local import VAT due
– Import VAT can be reclaimed via local VAT return. In NL import VAT deferment remains possible
– Customs duties due
– Distance sales: local VAT registrations necessary due to destination VAT principle?
• When the I-OSS procedure is not used: Fall Back method applies
– On behalf of the suppliers the transport companies or postal operators must report and pay VAT
– No import VAT exemption
– The supplies are subject to the standard VAT rate, even when the reduced rate is applicable
– The consumer may request the supplier to use the reduce rate (additional customs clearance necessary)

6. What’s next?
1. Different treatment EU vs. non-EU suppliers
– EU suppliers: if sales value < € 10.000: VAT charged at origin
– Non-EU suppliers: destination VAT as of € 0,01
– EU suppliers can always use the standard + reduced rate
– Non-EU suppliers must be registered under the I-OSS to use both rates
– In case of Fall Back: standard rate applies unless consumer asks for reduced rate (regular customs clearance necessary)
2. Compliance
– EU suppliers can register under OSS or appoint a local fiscal representative with ease
– Non-EU suppliers: it is expected that only multinational enterprises will register under the I-OSS due to conditions
– Smaller non-EU companies will probably go for the Fall Back method

7. What’s next?
3. Verification data vs. parcels by Customs
Local customs authorities must check all incoming parcels if they are cleared under the I-OSS or not. But how? Must supplier put a
barcode on each parcel? Must Customs check each parcel individually again?
4. Transport companies and postal operators
– When Fall Back method is used: liable for VAT
– These companies will demand guarantees: payment VAT before releasing goods or immense deposit
– Postal operators will probably not be able to distinguish commercial parcels from ‘gifts’
– How will these companies verify all incoming data and parcels when nowadays 65% of all parcels are not compliant?
– Major, if not impossible, compliance burden arises

8. End of undervaluation?

9. NO

10. Conclusions
1. Undervaluation still possible, only a check for OSS
2. Audits: EU suppliers have a problem, non-EU suppliers (especially Chinese) are relatively safe
3. I-OSS registration: non-EU suppliers will look for the EU country where they can expect less or no audits
4. The EU just improved an old system and increased the compliance and liability burden for EU companies
In 2021: VAT liability for platforms introduced. Focus on VAT is prepared and has solutions

11. Thank you
For more information please contact us:
office: + 31-20-320 06 44
e-mail: businesssupport@focusonvat.com