VAT changes in EU from 1st of July 2021

                Everything you need to know about the new VAT changes

                E-commerce has exploded in popularity in recent years.

                The Internet has reached a tipping point, luring a large number of customers and billions of dollars to the vast and increasing virtual mall.

                With the ongoing global pandemic, e-commerce has had a significant market growth rate of around 19 percent in the last year.

                Currently, EU enterprises who sell goods within the EU to consumers in other EU Member States over a certain threshold (EUR 35 000 or 100 000, depending on the Member State) must register and pay VAT in the buyers' Member State.

                On July 1st, EU VAT legislation for internet purchases will change. Sellers, particularly those selling cross-border within the EU's internal market, would be affected by these developments.

                National delivery thresholds are no longer in effect, and new reporting methods are in the process.

                A new EU-wide threshold of EUR 10,000 will be implemented on July 1, 2021. If your cross-border sales fall below this new threshold, you'll still be subject to domestic VAT restrictions (including the SME exemption plan).

                If your sales exceed this amount, you must pay VAT in the Member State where your customers are situated.

                Businesses beyond this threshold will register for a new OSS (One-Stop-Shop) where they will disclose and pay VAT.

                The VAT eCommerce shift will affect not only B2C sales within and to the EU but also every stage of the chain, including postal operators, couriers, and customs offices. Consumers will be impacted as well, since prices for imported goods would increase. For the delivery of low-value shipments, it may require the buyer to pay VAT to the courier or postal operator.


                What is a One-Stop-Shop, and how does it work?

                The Union One-Stop-Shop (OSS) is an internet platform that allows firms to set up their VAT responsibilities for e-commerce sales to customers within the EU.

                This reduces online merchants' and electronic interfaces' VAT responsibilities by up to 95% across the EU by allowing them to:

                • For all intra-EU distance sales of goods and services, register for VAT online in one Member State for services provided directly to consumers

                • During a single electronic quarterly return, report and pay the VAT on all products and services supplied.

                • Despite the fact that their sales are cross-border, they should work with their Member State's tax administration and in their own language.

                Who can use it?

                1. A taxable person based in the EU (who is not a considered supplier) can utilize the Union OSS for the following purposes:

                • Provision of B2C services in a Member State where he is not based

                • Within the EU, things can be purchased via the internet.

                2. A taxable person who is not based in the EU: sales of products via the internet within the EU

                3. An electronic interface (created within or outside the EU) that facilitates product supply (deemed supplier):

                • Within the EU, things can be purchased via the internet.

                • Certain domestic product supplies

                How do I sign up for the OSS?

                • Every EU member state has the option of registering on an OSS web site.

                • This single registration, on the other hand, will be valid for all sales to consumers in the rest of the EU.

                What types of items are covered by the Union OSS?

                • B2C services provided by EU-based suppliers in a Member State where they are not based.

                • Distance sales of items within the EU by suppliers based in the EU and those who are not based in the EU.

                • Electronic interfaces facilitate the sale of products over long distances within the EU.

                • Certain home product supply using electronic interfaces that facilitate sales.

                What if your company isn't based in Europe?

                The non-Union program will be extended on July 1, 2021, and can only be used by (online) merchants who are not based in the EU.
                These non-EU internet merchants are responsible for any B2C services supplied within the EU.

                Providing goods to buyers outside the European Union

                You do not have to charge VAT if you sell items to customers outside the EU. You will, however, be able to deduct the VAT you paid on associated expenses, such as products or services acquired particularly for those transactions.

                Purchasing goods from outside the European Union

                You must pay VAT at the point of import if you buy products for business from a source outside the EU.
                If you make taxed sales, you'll normally subtract this amount from your VAT declaration later.

                Taxes in Odoo

                The majority of your country's sales taxes are already pre configured on your database as part of your Fiscal Localization Package. However, just a handful of them are turned on by default, so you can turn on only the ones that are relevant to your company.

                To activate Sale Taxes:
                1. Navigate to Accounting Configuration, 
                2. Taxes
                3. and activate or deactivate a tax using the Activate toggle button.

                Tax Return (VAT Declaration) in Odoo

                The Tax Return Periodicity option allows Odoo Accounting to appropriately compute your tax return and also send you a reminder so you never miss a tax return date.

                To do the setup, go to:
                1. Accounting Configuration 
                2. Settings
                3. Fiscal Periods 
                4. and then to the Tax Return Periodicity section

                • Periodicity: specify whether you file your tax return once a month or three times a year.

                • Reminder: Set a reminder for Odoo to remind you to file your tax return.

                • Journal: Choose a journal in which to keep track of your tax return.

                Tip: You can create your necessary value-added tax (VAT) or install the Mini-One-Stop-Shop that Odoo provides for quick and easy tax management!

                Learn more about the taxation process in Odoo on this link. 

                Or watch the videos down bellow!



                VAT changes in EU from 1st of July 2021
                Nikola R. 15 September, 2021
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