The new provisions modify the existing VAT special schemes laid down in the VAT Directive (non-Union scheme, Union scheme) and add a new one (import scheme). A summary of the most important law changes in the field of e-commerce can be found in the previous article and the electronic platforms as deemed supplier have been also already described here. This text summarizes the provisions of the e-commerce law regarding the special schemes.
The Mini One Stop Shop (MOSS) is an electronic system allowing taxable persons supplying telecommunications, broadcasting and electronic (TBE) services to consumers in the EU to declare and pay VAT due in all EU Member States in one single Member State. As from 1 July 2021, MOSS is extended to all B2C services taking place in Member States where the supplier is not established, to intra-Community distance sales of goods and to certain domestic supplies of goods and will thus become a One Stop Shop (OSS).
The below table provides an overview of the amendments that apply as from 1 July 2021.
Table 1: Overview of changes to the special schemes as of 1 July 2021
|Non-EU established taxable person/supplier||EU established taxable person/supplier|
|Transactions||Special scheme||Need for intermediary or tax representative||Special scheme||Need for intermediary or tax representative|
|Supplies of B2C services||Non-Union scheme (OSS)||NO||Union scheme (OSS)||NO|
|Intra-Community distance sales of goods||Union scheme (OSS)||NO||Union scheme (OSS)||NO|
|Domestic supplies by EI||Union scheme (OSS)||NO||Union Scheme (OSS)||NO|
|Distance sales of imported goods from third countries or third territories in consignment not exceeding EUR 150||Import scheme (IOSS)||YES||Import scheme (IOSS)||NO|
A new scheme is created for the declaration and payment of VAT on distance sales of low value goods imported from third countries or third territories, the Import One Stop Shop (IOSS).
Table 2 provides a break-dawn of the types of supplies and types of taxable persons covered by each of these special schemes.
Table 2: Overview of special schemes
|Non-Union Scheme/OSS||Union Scheme/OSS||Import Scheme/ IOSS|
|Types of supplies||ALL B2C supplies of services to customers in the EU||a) ALL intra-Community B2C supplies of services
b) Intra-Community distance sales of goods
c) Article 14a(2) domestic
B2C supplies of goods
|Distance sales of imported goods in consignments
< EUR 150
|Taxable persons||Non-EU established||a) Only EU established
b) EU & non-EU established
c) Electronic interfaces EU and non-EU established
|EU & non-EU established, including electronic interfaces|
What are the advantages of the OSS?
In order to help better understand the new law, the European Commission Directorate – General Taxation and Customs Union issued the Explanatory Notes on VAT e-commerce rules. According to these notes, the One Stop Shop simplifies VAT obligations for businesses selling goods and supplying services to final consumers throughout the EU, allowing them:
- to register for VAT electronically in one single Member State for all the eligible sales of goods and services to customers located in all the other 26 Member States;
- to declare in a single electronic VAT OSS return and to make a single payment of the VAT due on all these sales of goods and services;
- to work with the tax administration of the Member State in which they are registered for the OSS, and in one language, even though their sales are EU-wide.
Regarding the practicalities of the OSS and IOSS, such as registration and de-registration, VAT returns, corrections, payment of VAT, etc. please see the Guide to the VAT OSS.
The Non-Union Scheme
The new rules extend the scope of the special scheme for taxable persons not established in the EU supplying TBE services (the non-Union scheme) to all services supplied to non- taxable persons which take place in a Member State in accordance with the place-of- supply rules.
This means that as from 1 July 2021, businesses not established in the EU supplying services to non-taxable persons (consumers) in the EU, do not need to register for VAT in each Member State in which their supplies of services take place. Instead, the VAT due on these supplies can be declared and paid in one single Member State (the so-called Member State of identification) via the One Stop Shop (OSS, non-Union scheme).
The new rules do not change the place of supply of those services, but only offer a simplified procedure to declare the VAT due in the EU Member States where the supply takes place.
Examples of B2C supplies of services (a non-exhaustive list) that could be reported under the non-Union scheme are:
- Accommodation services carried out by non-established taxable persons,
- Admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events, such as fairs and exhibitions,
- Transport services,
- Services of valuation and work on movable tangible property,
- Ancillary transport activities such as loading, unloading, handling or similar activities,
- Services connected to immovable property,
- Hiring of means of transport,
- Supply of restaurant and catering services for consumption on board ships, aircraft or trains etc.
The Union Scheme
The new rules that apply from 1 July 2021 extend the scope of the Union scheme in a twofold way:
- The range of supplies that can be declared in the Union scheme is broadened, namely:
- In addition to cross-border supplies of TBE services to non-taxable persons in the EU, a supplier can also declare all other cross-border supplies of services to non-taxable persons taking place in the EU;
- The supplier can declare all intra-Community distance sales of goods;
- Electronic interfaces who become deemed suppliers for supplies of goods within the EU can declare intra-Community distance sales of goods as well as certain domestic supplies of goods in the Union scheme.
- The scope of taxable persons (suppliers) who can use the Union scheme is enlarged.
The Union scheme can be used by:
- A taxable person established in the EU (who is not a deemed supplier) to declare and pay VAT for:
- supplies of B2C services taking place in a Member State in which he is not established;
- intra-Community distance sales of goods.
Services that are supplied to customers in a Member State in which the supplier is established have to be declared in the national VAT return of the respective Member State irrespective of whether this fixed establishment is involved in the supply of services or not.
- A taxable person not established in the EU to declare and pay VAT for
- intra-Community distance sales of goods.
- An electronic interface (established in the EU or outside the EU) facilitating supplies of goods (deemed supplier) for:
- intra-Community distance sales of goods;
- certain domestic supplies of goods.
Domestic supplies of goods, i.e. where the goods are located in the same Member State as the customer to whom they are sent to, can exceptionally be declared under the Union scheme, but only by an electronic interface for the supplies where it becomes a deemed supplier.
Can the Union scheme be used for part of the supplies falling under the scheme?
If a supplier or a deemed supplier decides to register for the Union scheme, he has to declare and pay VAT for all supplies that fall under the Union scheme. He cannot choose to declare them in the national VAT return.
A supplier established in the EU carries out intra-Community distance sales of goods and supplies of services to customers in various Member States of the EU. The supplier would like to register for the Union scheme and declare and pay VAT exclusively on the supplies of services via the Union scheme. He would like to declare and pay VAT on distance sales of goods according to general VAT rules in the respective domestic VAT return of the Member State concerned.
The supplier who decided to register for the OSS should declare all his supplies falling under the Union scheme under the OSS. Consequently, the supplier cannot choose to use the Union scheme only for supplies of services. Once registered in the Union scheme, both supplies of services and distance sales of goods have to be declared under the OSS.
An electronic interface established in the EU is a deemed supplier for intra-Community distance sales of goods and domestic supplies of goods to customers in the EU. The electronic interface also provides cross-border electronic B2C services to customers in the EU. The electronic interface would like to use the OSS for declaration and payment of VAT on distance sales of goods only. VAT on domestic supplies of goods as deemed supplier and electronic services would be declared and accountedfor by the electronic interface according to general VAT rules.
A supplier who decides to register for the OSS should declare all his supplies falling under the Union scheme under the OSS. Consequently, the electronic interface cannot choose to use the OSS for selected supplies. Once registered in the Union scheme, all its eligible supplies (distance sales of goods, domestic supplies of goods as deemed supplier and supplies of services) have to be declared under the OSS.
What are intra-Community distance sales of goods?
An intra-Community distance sale of goods takes place when goods are dispatched or transported by or on behalf of the supplier from a Member State other than the one in which dispatch or transport of the goods to the customer ends (the first subparagraph of Article 14(4) of the VAT Directive). This Article also provides that the supply of goods must be carried out for:
- A taxable person or a non-taxable legal person, whose intra-Community acquisitions of goods are not subject to VAT pursuant to Article 3(1) of the VAT Directive; or
- Any other non-taxable person.
To sum up, the term ‘intra-Community distance sales of goods’ covers supplies to the following customers:
- supplies of goods to non-taxable persons (consumers);
- supplies of goods (including excise products) to taxable persons or non-taxable legal persons listed in Article 151 of the VAT Directive (diplomatic arrangements, international bodies, NATO, etc.); and
- supplies of goods (except excise products) to: i) taxable persons carrying out only supplies of goods or services in respect of which VAT is not deductible, ii) taxable persons subject to the common flat-rate scheme for farmers, iii) taxable persons subject to the second-hand margin scheme and iv) non-taxable legal persons – (also known as the group of 4).
Distance sales of goods can cover any type of good irrespective of its value, including products subject to excise duty. The scope of the first subparagraph of Article 14(4) of the VAT Directive and thus the Union scheme cover supplies of goods subject to excise duty only in specific cases depending on the customer to whom the goods are supplied, thus only if supplied to:
- non-taxable persons; or
- taxable persons or non-taxable legal persons whose intra-Community acquisitions are not subject to VAT pursuant to Article 3(1) of the VAT Directive, thus those listed in Article 151 of the VAT Directive.
Intra-Community distance sales of excise goods to a member of the so-called group of 4 are not covered by the first subparagraph of Article 14(4) of the VAT Directive and can thus not be declared under the Union scheme (Article 3(1)(b) of the VAT Directive).
Place of supply
The place of supply of TBE services made by a taxable person (the supplier) established in a Member State to a non-taxable person (the customer) in another Member State is in the Member State where the customer resides.
The place of supply of intra-Community distance sales of goods shall be deemed to be the place where the goods are located when the dispatch or transport of the goods to the customer ends (Article 33(a) of the VAT Directive).
For other types of services covered by the Union scheme, the place-of-supply rules did not change.
It follows that in cases of intra-Community supplies of goods or services to customers, the VAT will be due in more than one Member State. To declare and pay the VAT due, the supplier can either register for VAT in (each of) the relevant Member State(s) or register for the Union OSS, generally in the Member State in which he is established.
Place-of-supply threshold (EUR 10 000)
To support micro-businesses, an annual EUR 10 000 turnover threshold has been introduced as from 1 January 2019, up to which the place of supply of TBE services to consumers in another Member State remains in the Member State where the supplier is established. As of 1 July 2021, this threshold covers cross-border supplies of TBE services and intra-Community distance sales of goods but not supplies of other types of services carried out to customers in the EU. The threshold is calculated by taking into account the total value of cross-border TBE services and intra-Community distance sales of goods and applies both to suppliers and to deemed suppliers.