VAT compliance after the 1st July 2021

VAT compliance after the 1st July 2021

VAT compliance after the 1st July 2021

VAT compliance is a comprehensive service addressed to entrepreneurs operating in the e-commerce industry. Entrusting external experts with matters related to taxes due to e-commerce activities in the EU is advantageous for the client. He does not have to worry about analyzing the legal regulations in force in the EU countries to which he sells his products or services (e.g., via the Amazon platform). Professional tax advisers will also deal with all other activities — VAT registration, VAT settlement or VAT refund. Major changes in VAT compliance are in the pipeline — they will come into force after 1 July 2021. What changes in VAT compliance will appear after July 1, 2021, and how will they affect e-commerce activities? We explain.

 

VAT compliance after 1st July 2021 — simplified procedures

 

Until now, entities conducting cross-border sales within the EU had to register as an EU VAT taxpayer in each country to which their goods or services were delivered. They didn't have to do it on their own — they could have the help of experts like our TaxCoach team. Moreover, Taxcoach specialists represent their clients before foreign tax authorities. Taxcoach offers substantive tax support for e-commerce entrepreneurs at every stage of their business in the EU.

Complicated regulations and varied procedures in the EU countries require expert knowledge of tax regulations. However, the situation will change soon — VAT compliance will be simplified after July 1, 2021. Entrepreneurs will no longer have to register as an EU VAT taxpayer in each country where they operate. Another important change will be VAT charging per the rules in force in the consumer's country. What does this mean in practice? Entrepreneurs can count on considerable savings — unequal treatment between transactions within the EU and those conducted with the so-called 'Third countries' — that is, outside the EU community.

 

Changes in VAT compliance after July 1, 2021 — what will change for e-commerce?

 

Equalizing issues related to taxes on EU and non-EU transactions is just one of the goals behind the changes in VAT compliance after 1st July 2021. EU entities in the e-commerce industry will face the unification of tax rules, which will translate into a reduction in costs (up to 95%!) Related to compliance with the regulations. After introducing changes to VAT compliance after 01/07/2021, you will be able to:

• Declare and pay EU VAT electronically;

• Deal with EU VAT issues: in your language, in your country and as part of the quarterly return;

• Use the “One Stop Shop” system — a one-stop shop for EU VAT.

According to the estimates of the head of the VAT department of DG TAXUD (Directorate General for Taxation and Customs Union) — Patrice Pillet — this concept will also help fight tax fraud, which generates losses of between EUR 5 and 7 billion per year. The “One Stop Shop” will significantly reduce the administrative costs that entrepreneurs in the e-commerce industry have had to bear so far. The unified and simplified “One Stop Shop” system will save EU entrepreneurs up to EUR 8,000 per each EU country, which is expected to result in savings of over EUR 2 billion.

 

Changes in VAT compliance after 1st July 2021 and import of goods to the EU

 

Changes in VAT compliance after 1 July 2021 will also apply to companies that import goods from outside the EU to EU countries. Customers of these entities will no longer have to pay import VAT when collecting the goods — the tax obligation will rest with entrepreneurs. In practice — they will have to pay VAT — directly to the selected tax authorities. Such a change will remove from consumers the risk of paying hidden costs — which will translate into more transactions.

“Import One Stop Shop” — is a service intended for companies that import their goods to the European Union. The principle of operation of this solution is the same as in the case of “One Stop Shop” — the entity must undergo electronic registration, submit a declaration and pay taxes (electronically). The difference is the combination of “Import One Stop Shop” with customs. Entrepreneurs from outside the EU do not have to wait until 1st July 2021 — they can register in the “Import One Stop Shop” today.

 

Changes to VAT on imported shipments — from 01/07/2021

 

What else will change? Shipments imported into the EU will be subject to a 23% VAT rate, regardless of the shipment’s declared value. Until now, items with an insured value below EUR 22 have been exempt from VAT. This was a massive field for abuse — especially in terms of importing electronic equipment from China. The Polish consumer did not pay VAT if the Chinese company declared the value of the shipment less than EUR 22 (often this value was consciously understated). This situation did not have a positive effect on ensuring fair competition for domestic sellers. However, this will change after 1 July 2021 — all shipments to Poland from outside the EU will be subject to the VAT rate applicable in our country — i.e., 23%.

 

VAT compliance after July 1, 2021 — access to the single market

 

Companies operating in e-commerce in the EU will gain a lot from the changes in VAT compliance. Until now, numerous and costly VAT procedures have successfully blocked cross-border sales. Following the entry into force of the changes to VAT compliance after July 1, 2021, online sellers will be able to reach a wider group of recipients. Thanks to the unification of the system and the simplification of procedures related to registration, declaration, and VAT payment, e-commerce entrepreneurs will have to meet only national requirements. They will be able to offer their products and services in the EU.

Do you run an Internet business and want to know more about the benefits of VAT compliance changes after July 1, 2021? Do you need help from tax experts to enter new markets? Do you want to optimize taxes and maximize profits? Contact us — our accounting office cooperates with the best specialists in the field of taxes. Taxcoach — your success counts here.