As of 1 July 2021, there will be significant changes in VAT in the entire European Union within cross-border electronic commerce (e-commerce). The reason for these changes is the endeavour to simplify cross-border on-line purchase and sale of goods to end consumers, to rectify conditions for companies in the EU and outside the EU, which previously had the advantage of exemption from VAT for low-value consignments, and to replace or unify the existing thresholds for distance sale of goods and provision of telecommunication, broadcasting and electronic services (herinafter “TBE services”) within the EU with a threshold for all Europe reaching EUR 10,000.

What is changing from 1 July 2021:

• Extension of the special one-stop-shop scheme – OSS
  

It will newly be possible to use the one-stop-shop scheme or the OSS not only for providers of TBE services (the current MOSS regime), but also

• for distance sellers of goods (e-shops) to clients-consumers in the EU (B2C),
• sellers of goods up to EUR 150 imported from a third country to clients-consumers in the EU (B2C),
• providers of services to clients-consumers in the EU (B2C) and
• an operator of electronic interface, which enables or facilitates supply of goods or provision of service (e.g. Ebay, Amazon etc).

This regime brings significant simplification of the administration especially for sellers of goods, who supply to end consumers within the EU. They will no longer need to monitor the limits for turnover in the individual countries, and especially they will not need to register for VAT in the individual member states of the clients after having exceeded the limit or at any earlier time. A seller can voluntarily register in his home country (country of identification) for the OSS regime and to pay VAT only in this EU member state even in case of cross-border performance within the EU.

Within the new OSS scheme, it will be possible to use 3 regimes:

1. Union scheme is intended for entities with registered office or business premises in the EU, who supply goods at a distance across the border or provider services to an end consumer (B2C) within the EU, and also for entities, which have neither registered office nor business premises on the territory of the EU, if the dispatching or transport of goods is commenced in the EU;
2. non-Union scheme is intended for entities with a registered office or business premises outside the EU, who provide services to an end consumer in the EU, and
3. import scheme is intended for distance sale of imported goods up to EUR 150 from a third country directly to an end consumer in the EU.

According to the current information from the Financial Administration, it is possible to register for the OSS regime from 1 April 2021 already using the portal Moje daně. Taxpayers or entities registered for tax can submit a request for registration. The tax administrator is the Financial Office for the South Moravian region. The current entities registered for MOSS will then be automatically transferred to the respective OSS regime.

• The unified threshold of EUR 10,000 for distance sale of goods and for provided TBE services
  

The new term “distance sale of goods” is being introduced for sending goods (in the sense of the current article 8 of the VAT act).
The current thresholds for distance sale of goods and TBE services within the EU will be cancelled and replaced with new EUR 10,000 threshold for all Europe.
Below this threshold, provision of TBE services and distance sale of goods in the EU can still be subject to VAT in the member state, in which the seller of the goods or provider of selected services resides. The condition is that the supplier resides only in one EU member state.
The threshold does not apply to the provision of other than the above-mentioned TBE services to an end user in the EU, however.
The seller may decide, though, that he will not use the EUR 10,000 threshold limit and will use the general rules about the place of provision/supply, i.e. taxation in the member state of the recipient. In this situation, he may choose registration to OSS in the member state, where he resides, even if he does not exceed the threshold value. In this case, the provider/supplier will be bound by his decision for a period of two calendar years.

• New rules for providers of electronic interfaces and platforms
  

From 1 July 2021, the legal fiction of sale of goods to the operator of the electronic interface and subsequently by this operator to the end client is being introduced. The operator thus becomes a so-called deemed supplier of goods.
This applies to operators of an electronic interface, who enable or facilitate supply of goods or provision of service (e.g. Ebay, Amazon etc.), unless the operator is selling his own goods.
A single performance is thus fictitiously divided into two, and transport is assigned to the supply of goods to the end client. Operators of Internet platforms will be able to use the new OSS regime according to new rules, more specifically the OSS import regime in the case of distance imported goods and the Union regime in case of distance sale of goods within the EU or within the country, but only if the supplier of goods is an entity that has neither a registered office nor business premises in the EU.

• Cancellation of exemption for import of low-value goods up to EUR 22
  

For reasons of rectifying the conditions in cross-border commerce, exemption for VAT for small consignments up to EUR 22 from third countries will be cancelled.
The importer, who is supplying imported goods to an end client in the EU, can newly use the OSS import scheme for consignments up to EUR 150.
The seller can thus register for the OSS import scheme and will not pay the tax on grounds of import at the customs house, but will declare it and pay it based on the tax return submitted within the OSS.
In case the end client is responsible for VAT payment, he can use a simplification, if he lets himself be represented in the customs proceeding by an entity, which has obtained a special permit for a special customs regime for import of goods (for example by Česká pošta).

In case of any questions relating to this issue or any need for assistance in registering for the new regime, please do not hesitate to contact us.