New VAT E-Commerce Rules

New VAT E-Commerce Rules

The EU has implemented new VAT e-commerce rules. Changes primarily affect
Cross-border e-commerce and Cross-border mail order business, meaning sales to consumers and
other non-entrepreneurs (B2C).

For distance sales of goods from Germany to other EU countries, it was previously possible in many
cases to settle with German VAT because the country-specific delivery thresholds were not exceeded.
Now, VAT is almost always due in the country of destination and foreign VAT must be charged. Since
the VAT rates in the EU are very different, the different VAT rates must be included in the calculation.
An exception applies only if the limit of 10,000 € is not exceeded with all dispatch deliveries to other
EU countries. In this case, German VAT may continue to be charged.
Nevertheless, companies can avoid VAT registration in other EU countries in many cases. For this
purpose, the so-called One-Stop-Shop has been extended (§ 18 j UStG). Intra-Community distance
sales can be reported via the One-Stop-Shop procedure (OSS). This is the further development of the
previous Mini-One-Stop procedure. Intra-Community distance sales subject to VAT in other EU states
can be reported together to the “Bundeszentralamt fuer Steuern” on a quarterly basis.
Services provided electronically to consumers in other EU countries are subject to foreign VAT. They
can also be reported via the One-Stop-Shop procedure (OSS). These transactions are also included in
the threshold of €10,000.
The previous Mini-One-Stop-Shop has also been expanded to the extent that non-EU traders may
also use the One-Stop-Shop procedure (OSS) for certain services subject to VAT in other EU
countries, e.g. services provided electronically (§ 18 i UStG).
The Import-One-Stop-Shop procedure (IOSS) was newly introduced for certain distance sales from
third countries (§ 18 k UStG).

Other important innovations:

  • In the case of sales via an electronic interface (marketplace, for example Amazon), a supply chain
    fiction applies in certain constellations. This means that for VAT purposes, a delivery by the supplier to
    the marketplace and a delivery by the marketplace to the consumer are fictitious, although the
    marketplace only acts as an intermediary. The supply chain fiction affects in particular certain distance
    sales by traders not established in the EU, but also certain distance sales by traders established in the
    EU in the case of deliveries of goods from a third country.
  • The previous import VAT exemption limit of € 22 has been abolished.
  • A new import VAT exemption has been introduced (§ 5 para. 1 no. 7 UStG).

The VAT consequences of Cross-border e-commerce and Cross-border mail order business depend
on the combination of the following characteristics:

  • Company established in the EU or not established in the EU
  • Delivery of goods within the EU or from a third country to the EU
  • Delivery of goods via an electronic interface (marketplace) or not
  • Value of goods up to €150 or over €150

In the case of goods imported from a third country, the VAT consequences are also closely linked to
the customs treatment of the goods.

We can help you to:

  • avoid additional payments of German and foreign VAT.
  • have as little administrative work as possible with the processing of VAT declarations.
  • be able to use the entire EU internal market as a sales market.