June 23 2021

The UE has introduced new rules for cross-border VAT for Business to Consumer online sales. The goal of this article is to present you with the basics of what this entails for you as a merchant and ask you to give your feedback about some solution we're thinking of.
In order to do that, we've setup a small survey ( you'll find a link to it at the end of this article ) and hope that as many of you as possible will take the time to answer it.
We recommend you take the time to read this article carefully, and consider your different options and express yourself !

The new EU VAT rules

The main point of these new rules is to modernised the cross-border VAT e-commerce in the EU, and it will impact all the supply chain, from online sellers and marketplaces/platforms both inside and outside the EU to EU consumers as well.
These new rules will apply starting on July 1, 2021 for the business-to-consumer (B2C) supply of products. Let's detail this new legislative context. For more in-depth details, you can go to the official European Union website, here.

Distance Selling and single threshold

The concept of distance selling will be redefined and the thresholds will be removed.

There will be two types of Distance Selling:

  • Distance Selling of goods imported from countries outside the EU : these are BtoC sales when the goods are transported by the seller or on his behalf from a State located outside the EU directly to the end customer in a Member State of the EU.
  • Distance Selling EU Intra-community : these are sales of BtoC goods when the goods are transported by the seller or on his behalf from an EU member state to another EU member state.

Local Distance Selling thresholds will be removed:

  • Distance Selling of goods imported from third countries outside the EU will, from the first Euro, be subject to VAT in the country of arrival.
  • Intra-community Distance Selling will always, from the first euro, be subject to VAT in the country of arrival too.
    However, the VAT of their country of establishment may continue to be invoiced for European companies located in a single EU member state whose annual global amount excluding VAT of intra-community Distance Selling, added to the annual global amount excluding taxes of intra-community BtoC services, not exceed 10,000 Euros (excluding tax).

Discover in details what is changing on the Official UE website

3 regimes and corresponding electronic portals (OSS)

3 optional special regimes and corresponding electronic portals (One Stop Shop or OSS) are now introduced.

  • Non-EU OSS: will allow companies not established in the EU to declare their intra-community BtoC services performed.
  • EU OSS: will allow the declaration of intra-community mail order carried out by European companies, not established in the EU and marketplaces, local sales of marketplaces, intra-community BtoC services of European companies.
  • IOSS import (import one stop shop): will allow the declaration of Distance Selling of goods imported from third countries with a value not exceeding 150 Euros, made by European and non-EU companies and marketplaces.

Learn more about the new One-Stop Shop on the Official UE website

Learn more about the One-Stop Shop on the Official UE website

Elimination of the import VAT exemption for imported packages less than 22 euros.

As of July 1, 2021, the exemption from import VAT and customs declaration for small shipments with an intrinsic unit value less than or equal to 22 euros will be abolished.
This will be replaced by an import VAT exemption only. It will be applicable to packages whose value does not exceed 150 euros, and whose sales are declared via the IOSS system. These will also remain exempt from customs duties.
To benefit from the exemption, a customs declaration must be submitted upon importation. The seller's IOSS VAT number must appear on it, the authenticity of which will be verified by the customs service.

Learn more about the Import One-Stop Shop on the Official UE website

Marketplace & VAT

With the application of these new rules, marketplaces will be considered as having bought and sold the products themselves, with regard to VAT.

As a result, 2 transactions will exist with regard to VAT:
  • A sale exempt from VAT between the seller and the marketplace in the country of departure
  • A taxable sale between the individual customer and the marketplace, subject to VAT in the country of arrival.

It will then be up to the marketplace to collect, declare and pay back the VAT instead of the sellers.
However, the VAT accountability of marketplaces only concerns the operations below:

  • For non-European companies: on all BtoC sales located in the EU, including local sales
  • For European companies: on online sales of goods imported from third countries with a value not exceeding 150 euros

Discover in details what is changing on the Official UE website

Our different solutions

From these new rules, as previously said, different solutions are possible.

The first and most direct solution is to adapt your e-shop manually. As most of you already know, HikaShop already has an advanced tax system which can allow you to charge different tax amounts based on the shipping address of the customer.
And here is where we introduce Transiteo. It's a solution we could integrate with HikaShop, that would be able to dynamically process tax calculations for each case automatically and thus greatly simplify the setup for you. On top of that, it can also calculate custom duties and generate the required cross border documents for your packages.
These taxes and duties would be dynamically shown during the checkout process in order to inform as soon as possible the customer so that he knows what are the costs associated with his order instead of discovering that he has to pay extra for custom duties when he receives the package (that can sometimes happen with online purchases).
So we've been talking with Transiteo to develop an integration plugin with their services, to simplify a lot of the setup for many merchants.

Now, you might be thinking that this looks great, so there must be a catch, right ? Well, Transiteo's services aren't free, of course, but they are quite reasonnable. Most, if not all, of merchants using HikaShop would pay only 50 Euros each month, to be able to benefit from all these advantages & automatic services.

Your opinion matters to us!

And here is where we need YOU ! We have create a survey in order to collect your opinions on this possibility, to see if it makes sense for us to work on that integration, which is a big project for our small team.
We tried to make the survey as small as possible and it is completely anonymous.
We thank you in advance for expressing yourself on this point so that we can see how to direct our efforts so that we best meet your expectations.

You can use the button bellow to access the survey :
Our HikaShop/Transiteo survey

Documentations index

Keep in touch folks.
Team HikaShop