ecommerce iva

The current VAT scheme was not prepared to face the challenges of a global economy, digital and changing as it was conceived as a transitory system, whose old ambition was based on taxation at source of inter community transactions as well as of the delivery of products and services to end consumers.

The new VAT design aims at modernizing and simplifying VAT of cross border ecommerce, based on the reform of distance sales, the widening of the one stop shop mechanism applying on telecommunication services, radio and television to services provided online as well as the equalized treatment of EU and non EU suppliers.

✔ The first measures to modernize and adapt the EU Directive 2017 / 2455 in relation to VAT for the rendering of services and distance sales, whose entry into force was done on January 01, 2019, were incorporated to the Spanish legal system by means of the 2018 Budget Law (06 / 2018).

✔ With the purpose of reducing administrative burdens, these new regulations modified the rules of taxation of services rendered through electronic means, telecommunications, radio broadcast and television for companies established in one Member State rendering occasional services in other States, establishing:

  • i. A common threshold at a EU level of up to 10,000 euro per year that permits that, while this limit is not exceeded, services are subject to VAT in the State where the provider is established. Once this limit is exceeded, VAT is due in the State of consumption.
  • ii. New invoicing rules so as to avoid that the supplier of these services had to comply with the invoicing requirements of all the Member States where the services are rendered, hence, being subject to the rules of the member State where the supplier is identified.
  • iii. Permitting the use of the special mechanism of one stop shop to companies not established in the EU but already registered for VAT purposes in another member State.

These changes remain in force and shall also apply in relation to the transactions to which the one stop shop is permitted.

✔ In the transposition of the second part of the Directive, with effects as from July 01, 2021, new modifications are established in relation to products and services engaged in internet by end consumers, based on the before mentioned pillars and that will be further developed in our next post.

With effects as from July 01, 2021, new modifications are established in relation to products and services engaged in internet by end consumers (that is to say, not acting within the context of an entrepreneurial activity) when such products or services are sent or rendered from another EU member State or a third country, (a non EU territory).

VAT in ecommerce transactions is managed through the so – called one stop shop that permits, with one single tax return filed before one member State, paying the accrued VAT for all the transactions carried out within the EU. Thanks to this scheme, companies do not need to register, for Vat purposes, in every country where they have sales to end consumers.

✔ The special scheme applying to telecommunication, radio and television broadcast and electronic services rendered by companies established in the EU, but not in the State where products are consumed, is extended to intercommunity distance sales as well as to a new scheme of a similar nature applying to distance sales imported from third countries.

✔ Accordingly, two new categories of supply of goods are defined:

  • i. Distance inter community sales of goods:
    • These are supplies of goods in which the supplier bears the transportation from one Member State to another, and in which the recipient is an end consumer.
    • These supplies are taxable in the Member State of the recipient; hence, VAT must be paid in such State, providing the new EU common threshold of 10,000 euro is surpassed, (this latter substitutes the different thresholds formerly existing in each Member State).
    • Suppliers can elect to be subject to a One Stop Shop scheme in order to comply with all the VAT obligations for their sales within the whole EU. One single tax return can, therefore, be filed before the Spanish tax authorities that will then transfer the accrued VAT in each Member State in which the goods or services have been supplied and have been subject to VAT in each one of such States.
  • ii. Distance sales of imported products from third countries:
    • These are supplies of products that have been expedited or transported by the supplier from a third country to recipients that have the condition of end consumers established in a Member State.
    • Suppliers can elect to a One Stop Shop scheme and liquidate the VAT accrued in all the Member States of consumption through one single Tax office of the Member State in which the supplier is identified.
    • The VAT exemption on imports of low value goods applying up to 22 euro of global value of the merchandise is eliminated. However, a new exemption is introduced for imports of goods whose value does not exceed 150 euro and which are declared through the One Stop Shop scheme.

Publicado el 09-2021 por PBS