Not only the Corona crisis has posed a number of challenges to the logistics market, as can be read in our whitepaper. Also Brexit with its unclear processes, is keeping the world of eCommerce in check. From July 2021 onwards, the so-called VAT eCommerce Package is also planned, which will bring the EU-wide VAT law up to the latest digital standard. Why is this change happening? The basic provisions of the VAT law are still largely the same as in 1993 when eCommerce did not exist in its present form.
Warehousing1 summarizes the most important points that eCommerce firms should know about the changes from Mini-One-Stop-Shop (MOSS) to One-Stop-Shop (OSS) from July 2021.
How has the MOSS principle worked so far?
The Austrian Federal Ministry of Finance summarizes the areas covered by the MOSS as follows: "If an entrepreneur uses the MOSS, the obligation to register for VAT purposes in each Member State in which he/she provides such services for electronically supplied other services, telecommunications, radio or television services to non-entrepreneurs in the EU and subsequently submit tax returns and make payments there is no longer applicable.”
The MOSS was the previous way to register in an EU member state - the so-called Member State of Identification (MSI). With the registration, all transactions covered by the special regulation could be declared via the MSI; furthermore, the resulting VAT could be paid directly.
In addition, the sales tax had to be paid at the place of consumption, i.e. in the home country of the end customer. This in turn meant that eCommerce merchants had to be registered in every country where they offered shipping. Actually, the changes were supposed to be implemented at the turn of the year, but due to the Corona pandemic, this was postponed by six months.
The prerequisite for the MOSS was a UID number and a timely application to the responsible tax authorities. Although the MOSS has been in use since 2015, the process is still not working properly. Until today, the MOSS only records a fraction of the sales tax revenue that OSS - as the big brother of the MOSS - is supposed to collect in the future.
OSS: What is new & what does it mean for you?
From 01.07.2021, the sales tax for cross-border eCommerce will undergo a remarkable change. Here are the most important points that come with the introduction of OSS summarized:
- Entrepreneurs who operate an electronic interface such as a marketplace or platform will be treated as suppliers of goods for VAT purposes in certain situations. Therefore they have to collect and pay the VAT due on these sales.
- In contrast to MOSS, when a seller makes use of the import scheme, he only invoices, collects, declares and pays the VAT at the time of sale to EU end customers in the one-stop shop to the Member State of Identification.
- The introduction of the import regulation goes hand in hand with the abolition of the currently applicable import VAT exemption for goods in small consignments with a value of up to €22. This is also consistent with the obligation to apply the system of the country of destination for VAT. Up to 150€ the goods are mostly duty-free.
- If the import regulation is not used, a second simplification is available for the import. The import sales tax is collected by the customs declarant (e.g. post, courier service, customs agent) from the end customer and paid monthly to the customs authorities.
The success of an eCommerce company stands and falls with logistics. Therefore our partners at Warehousing1 are always informed about new developments and innovations in order to handle projects as efficiently as possible.
OSS: What’s awaiting your company
As a logistics company or customer of Warehousing1, the changes mean above all simpler customs procedures and thus also faster delivery times. With OSS, the EU is taking a first and important step towards abolishing the cross-border mail order threshold.
During the transition phase from MOSS to OSS there are of course also some hurdles that an eCommerce company should be aware of. The biggest challenge in the implementation of the VAT eCommerce Package is still the technology. Another problem is clearing by the state where the company's headquarters is located. Due to the modernization of the import regulation for goods with a value of up to 150 €, a change in the shipping processes of your goods is absolutely necessary.
For questions regarding warehouse logistics and fulfillment, Warehousing1 is the ideal partner. Feel free to talk to one of our account managers in a non-binding meeting and find out how you can best prepare your logistics setup for the new year.