By Emmanouela Kolovetsiou-Baliafa, Associate, KG Law Firm, Greece
On July 18, the Greek government published Law 4818/2021 in the Official Gazette, incorporating into Greek tax legislation the provisions of EU Council Directives 2017/2455 and 2019/1995 and introducing the new VAT rules for online cross-border transactions. The rules apply both for shipments within the EU and for imports from third countries.
The VAT rules applicable to distance selling and more broadly to business-to-consumer e-commerce have been modified in all EU countries. The set of regulations modifying these rules, called the “E-commerce package”, was initially supposed to come into force on January 1, 2021, but was postponed for six months because of the Covid-19 pandemic. The new rules set out by Law 4818/2021 come into effect as of July 1.
Who is affected?
Everyone in the e-commerce supply chain is affected, from online/distance sellers and marketplaces/platforms established both inside and outside the EU to postal operators and couriers, customs and tax administrations, right through to consumers.
Which transactions are covered?
The rules cover distance sales of goods within the EU carried out by suppliers or deemed suppliers, domestic sales of goods by deemed suppliers, and supplies of services by EU and non-EU sellers to consumers in the EU. They also cover distance sales of goods imported from third territories or third countries carried out by suppliers and deemed suppliers, except for goods subject to excise duties.
What has changed?
The existing thresholds for distance sales of goods within the EU are abolished and replaced by a new EU-wide threshold of EUR 10,000 (approximately USD 11,800). When supplies of telecommunications, broadcasting and electronic services and distance sales of goods within the EU do not exceed this new threshold, VAT can be charged at the supplier’s country’s VAT rate. However, when that threshold is crossed in another Member State, VAT must be charged at the rate of the country of destination.
The VAT exemption for imports of low value consignments (goods with a value not exceeding EUR 22) is abolished. Therefore, all goods imported in the EU are subject to VAT.
The Mini One Stop Shop (MOSS), i.e., the electronic system allowing service providers supplying telecommunications, broadcasting and electronic services to consumers in the EU to declare and pay VAT due in all EU Member States in one single Member State, is extended to all business-to-consumer services taking place in EU Member States where the supplier is not established. Under the new scheme, the so-called Union One Stop Shop (OSS), suppliers and electronic interfaces can register in one EU Member State, and this registration will be valid for the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to customers within the EU.
A new category is introduced, namely “import scheme,” applicable for distance sales of goods in consignments not exceeding EUR 150 imported from third countries to individual customers in the EU. Unlike under the previous rules, under the new import scheme, the supplier and the electronic interface charges and collects the VAT at the point of sale to EU customers and declares and pays that VAT globally to the member state of identification in the new electronic portal businesses, the so-called Import One-Stop Shop (IOSS). As the supplier and the electronic interface are registered in a third country and not registered in any EU member state, they are free to choose the member state of identification where they will be required to register under the IOSS. For registration purposes, the supplier and the electronic interface must appoint an intermediary established in the EU, e.g., a courier, postal operator or customs agent. Since the IOSS scheme shifts the place of supply to the point of consumption, VAT declared by the supplier in the Member State of identification will be “allocated” to the Member State of consumption on the basis of the supplier’s declarations.
On the contrary, where the IOSS is not used (i.e., in cases where the supplier or the electronic interface is not registered in the IOSS), a second simplification mechanism is available for imports. Import VAT is collected from customers by the customs declarant (e.g., postal operator, courier firm, or customs agents) who pays it to the customs authorities via a monthly payment.
Special provisions are introduced whereby operators of online marketplaces/platforms are, in the event of cross-border sales to consumers in the EU, in certain situations, responsible for reporting VAT (deemed suppliers), even if they do not contractually form part of the supply chain. This applies to consignments from a non-EU country with a value not exceeding EUR 150; or where the supplier is based outside the EU.
Online marketplaces/platforms need to keep records for the transactions they facilitate, irrespective of whether they become deemed suppliers. Such records should be kept for 10 years and be made available electronically on request by Member State(s).
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