New rules about retailers' liability for VAT on goods shipped to or within the European Union are being introduced in July 2021.
Yet even before that date - on April 1st - there's another critical milestone if you want to capitalise on a new platform designed to simplify how the tax is administered.
That's the date on which registrations open for the One-Stop Shop.
What is the One-Stop Shop?
The idea of the One-Stop Shop was created by the European Union to make it easier for those businesses involved in e-commerce or 'distance selling' to manage VAT submissions associated with sales to consumers in member states and pay any tax which is due.
It's one very significant part of a new and comprehensive package of VAT rules which take effect from the 1st of July.
You should be aware that there are two distinct models of the One-Stop Shop.
If you're based outside the EU, the Import One-Stop Shop (IOSS) requires you to declare all parcels worth up to €150 which are shipped to customers in the European Union.
The Union One-Stop Shop (OSS) is designed for items sent between European Union member states.
New thresholds, new rates
Among the changes taking effect in July are two which are relevant for e-commerce operators.
The first is the scrapping of something known as the Low Value Consignment Relief (LVCR) for goods sent to the European Union from elsewhere.
Until now, the LVCR has meant that items worth less than €22 and bought online by consumers in European Union countries have been exempt from VAT.
From July 1st, though, VAT will be applied to all goods sent to EU states from the first cent or penny of their value and imposed at the rate levied in the country to which they are delivered.
Secondly, if the goods in question are sold by e-commerce brands based outside the EU via an electronic interface, such as an online marketplace, that interface will be required to register and pay any VAT which is due.
A further change is relevant for EU-based retailers shipping to other EU countries and, therefore, might be eligible to register with the Union OSS instead.
It will see the threshold at which such firms need to register for and pay VAT in their products' countries of destination lowered and standardised.
Currently, those levels vary between different territories (from €35,000 to as much as €100,000) but they will be replaced in July by a single rate of €10,000.
How will the One-Stop Shop help?
Although participation is not compulsory, both the IOSS and Union OSS promise to make life easier for both retailers like you and your consumers.
Rather than needing to make registrations with tax authorities in each of the 27 member states in which you have customers, the One-Stop Shops provide you with a single point of administration for all VAT your liabilities across the European Union.
If you have a physical presence (an 'entity') in the European Union, you simply need to register on the One-Stop Shop portal of an European Union member state from the 1st of April.
If not, you will need to appoint an intermediary based in the EU - someone who will be responsible for fulfilling their VAT obligations - to do it on their behalf.
There are exceptions, however. Norway is exempt from the intermediary rule and although negotiations as part of the UK's withdrawal from the European Union noted that it too would be exempt, at this point UK businesses would require an intermediary. Currently (March 31), the Member States have been advised to require UK businesses to have an intermediary. This may however change in the next couple of weeks when the European Commission is expected to communicate on a joint interpretation on the VAT mutual assistance agreement on the Brexit-deal.
As well as being able to register just once, the One-Stop Shop streamlines the VAT process in for you in other ways, meaning that you only have to submit a single return and payment, must only meet one VAT payment deadline and have to keep relevant documentation for a standardised period (10 years).
Importantly, it means that your customers won't face any unwanted surprises.
Any VAT which is due will be paid by them at your online checkout, meaning that cross-border deliveries will not necessarily experience delay and consumers won't be presented with an unexpected additional bill on the doorstep.
Get in touch
As part of one of the world's largest post and parcel companies, Post NL, we know that any differences in the way that tax on cross-border sales is handled may be a challenge for some businesses.
Since the new rules were announced, Spring's local sales teams have helped many hundreds of retailers like you in the European Union and much further afield understand what the changes mean to them.
We can do the same for you and help you take advantage of the benefits which the One-Stop Shop represents, unlocking vital sales opportunities in European markets.
After all, we are Spring.
We listen, we inspire and we deliver.