What changed in the EU VAT rules?
- The minimum declared value limit for goods imported to the EU from non-EU countries will be abolished. Goods with a declared value less than € 22 will not be subject to VAT exemption anymore. From 01.07.2021 goods of any value that are imported to the EU will be subject to VAT.
- The current distance sales thresholds for cross-border trading within the EU (i.e. from one EU country to another) will also be abolished. Starting from 01.07.2021 merchants located (domiciled) in the EU with annual sales of more than EUR 10 000 will remit VAT in the country of destination (i.e. the EU country to which the goods are shipped).
- Businesses operating on marketplaces such as Joom will be treated as deemed suppliers for VAT purposes in some cases. In particular, for the single consignment with goods which value is less than 150 Euro Joom shall account for and pay VAT. For the cases that are considered as the ones Joom shall pay VAT for and which will remain within the scope of the merchant's VAT obligations please refer to the table below.
What changed for Joom?
The new EU VAT rules provide new obligations for the online e-commerce platforms:
- Joom will account for VAT and will pay VAT amounts directly to the EU tax authorities.
- To fulfill the record-keeping obligations, Joom will keep certain information about merchants and sales made on the platform for as long as 10 years from the date of sale. You must ensure that all the information about you and your sales made on the platform is correct and valid.
- Joom will issue invoices to the customers for the sales accounted by Joom to pay VAT. You have to ensure that you do not issue invoices for such sales.
- If you organize the dispatch or transport of goods sold on Joom to your customers without using the services provided by Joom Logistics, and Joom is responsible for accounting and collecting the EU VAT (as per the table above), you have to ensure that before the delivery you contact Joom for information needed to comply with the new EU VAT regulations.
- Joom will ask you to provide more information about your local warehouses in the EU. You have to ensure that you provide correct and valid information on the ownership over the goods stored in such warehouses located in the EU or any other information requested.
What should merchants do before 1 July 2021?
For the items for which you will be responsible for accounting and paying VAT:
- VAT amounts will be added to the price automatically when the user enters the final delivery destination information and such destination is within the EU except for consignments that are sold by EU merchants from local warehouses. You must ensure that the product price and shipping price you provide do not include the VAT amount.
- For the cases when you are a non-EU based merchant selling products located in the EU-based warehouse and at the moment of sale any other legal entity has the ownership over such products (i.e. such products were resold to any third or affiliated EU-based legal entity), VAT amounts will not be added to the price by Joom, as for such sales you will be responsible for accounting and paying the EU VAT.
- You should ensure that you comply with all applicable rules of the country of destination (i.e. the country of the user who ordered your goods), including the invoicing rules.
- You will be solely responsible for compliance with any tax obligations, including payment of VAT, filing of VAT returns, and any other obligations applicable.
For the items for which Joom will be responsible for accounting and paying the VAT:
- If you are an EU-based merchant and your products are outside of the EU at the point of sale (i.e. at the moment when the order is made by the user on the platform), you shall notify us immediately so we ensure the correct collection of VAT for such sales.
- If you are a non-EU based merchant selling products located in the EU-based warehouse and at the moment of sale any other legal entity has the ownership over such products (i.e. such products were resold to any third or affiliated EU-based legal entity), you shall notify us immediately to ensure that Joom is not responsible for accounting and paying the VAT.
Where can you find more information on the new EU VAT rules?
Nothing stated above constitutes legal advice and should not be relied upon as such. This article is for informational purposes only and may be updated by Joom from time to time.
If you have questions on how you should properly adjust your business to the new EU VAT rules or have any questions or concerns regarding the upcoming changes and their implications, please contact your legal and tax advisors.