The finance ministers of the European Union have agreed to simplify the rules on the taxes of the online sellers. In this way, in place of registering for VAT In each country of the European Union, online sellers will eventually be able to submit a single tax refund for the entire European Union. This should reduce the administrative costs and costs to e-commerce companies, and increase tax refunds from European countries.
El consulate of the European Union Estonia began adopting all these new rules yesterday; the Estonian finance minister commented that all this new variety of rules in the VAT system they are going to make Europe a suitable place for the digital economy. “We will achieve both a reduction in business expenses and an increase in tax refunds in the member states. This was one of the highest priorities of our presidency, ”says Toomas Toniste.
For entrepreneurs just starting their business, this whole process will become much simpler. Companies that fall within the lower range of 10.000 euros per year they will be able to continue applying the VAT rules of your home countryThis avoids the complexity of registering with multiple tax authorities while the volume of cross-border sales is still small.
What is VAT and why is it so relevant to e-commerce?
The VAT or Value Added Tax (VAT, in its most common name) is a consumption tax that is applied to almost all goods and services that are bought and sold for use or consumption within the European Union. This applies at all stages of the supply chain: manufacturing, distribution, and sale to the end consumer, including purchase of componentstransport, packaging, insurance or shipping.
Although there is common legislation at the European level, each member state defines its own regulations. VAT types (general rate, reduced rate, super-reduced rate, zero rate, or parking rate) and certain application specifics. For an online seller, this means that, depending on the consumer's location and the type of product or service, it may be necessary to apply a different VAT percentage to that of their country of origin.
In practice, for companies established in the EU, most sales of goods within the Union are subject to VAT, and the tax must be applied at the country of consumption from the client. On the contrary, the exports to third countries They do not carry VAT at origin, although the buyer does pay taxes and duties in the country of import, and the seller must retain all the customs documentation to justify the exemption.
Online sales regime within the EU and the €10.000 threshold
The new rules also mean that online sellers They will not be required to register for VAT in all member states where they sell their products once they exceed the old country-by-country distance selling regime. Based on information provided by the European Commission, these obligations cost companies around 8.000 euros per country of the European Union in which they sell. The commission estimates that this new rule will generate savings of €2.3 million for businesses and increase tax refunds to €7 million for member states.
The key element of this new framework is the single threshold of 10.000 euros for all cross-border B2C sales within the EU. As long as total sales to end consumers in other EU countries do not exceed that figure, the trader can continue to apply the VAT in your country of establishmentOnce the limit is exceeded, you must apply the VAT of the destination country of each sale, adapting prices, invoicing and declarations.
In B2B transactions, when the client is a company or professional with valid VAT number In another member state, deliveries of goods are considered intra-community and are usually exempt from VAT at origin, making it mandatory to check the VAT number in the VIES system and declare the operation on the corresponding forms of each country.
The OSS one-stop shop and form 369 to simplify compliance
To prevent sellers from having to register in every country where they sell, the EU has created the system of OSS one-stop shop (One Stop Shop). This system allows an e-commerce business to:
- Register only once in your member state of identification using specific forms such as model 035.
- Declare and pay the VAT corresponding to all destination countries in a single periodic declaration, using models such as the model 369.
- Avoid multiple tax registrations, significantly reducing the management costs and the risk of errors in different tax systems.
There are several OSS schemes adapted to different situations: companies established in the EU, non-European companies selling to consumers within the Union, and the scheme of IOSS import for low-value goods. In all cases, the declaration is entirely electronic and is made through the electronic office of the tax administration of the country of identification, which subsequently distributes the tax among the other member states.
To use OSS correctly, vendors must maintain a precise control of your sales by country, product type, and tax rate, as well as keeping invoices, shipping receipts, and proof of customer location. A common mistake is exceeding the €10.000 threshold without adjusting the online store's tax settings or registering with the single window system in time.
Operations with third countries, digital services and territorial particularities
When e-commerce sells to countries outside the EUIn countries like the UK, the US, or Latin America, sales are considered exports and are usually exempt from VAT at the point of origin. However, the buyer will assume the import taxes and the tariffs established by your country, and the seller must provide sufficient documentation (transport document, customs registration, electronic receipts) to prove the effective exit of the goods from the European Union.
In the field of digital services For services provided to consumers (software downloads, automated online courses, subscriptions, digital content, or web hosting), the general rule is that VAT is due on the customer's country from the first euro in many cases, so the supplier must apply the VAT rate corresponding to the user's state of residence and channel the settlement through the single window, similar to the trade of goods.
It is worth remembering that in territories such as Canary Islands, Ceuta and Melilla VAT is not applied; instead, local taxes (IGIC and IPSI) apply. For online stores based in mainland Spain or the Balearic Islands, sales to consumers in these areas are treated for tax purposes as transactions with separate territories, requiring invoicing without VAT and adherence to the specific customs procedures in each case.
Thanks to this combination of harmonized rules At the European level, through systems such as OSS/IOSS and common thresholds, the EU aims to reduce fraud, balance competition between European and non-EU companies, and at the same time provide online sellers with a clearer and simpler framework to expand their business within and beyond EU borders.