From 1 July 2021, intra-Community distance sales of goods are systematically subject to the VAT of the Member State of delivery.
The possibility for the seller to apply the VAT of the State Member that delivered when its sales do not exceed an annual threshold set by each Member State of delivery (threshold of €35,000 or €100,000) is therefore remove.
The principle of taxation at delivery place has only one exception for distance sales: this is the «micro-business», which is open to businesses with an overall annual turnover of intra-Community distance sales and intra-Community television, telecommunication and «B2C» electronic services of less than €10 000.
Which sales are concerned?
These are «B2C» sales, to a customer not liable for VAT (mainly sales to private individuals);
These are intra-Community sales where the delivery flow starts in one EU Member State and ends in another Member State;
The seller carries out the transport or intervenes, even indirectly, in carrying out the transportation. Some commercial schemes which until now consisted of having the transport carried out by a third party, thereby excluding de facto the apply to these transactions of the previous distance selling regime, are now subject to the new rules.
Thus, the scope of application of the new regime is extended and even providers who did not apply the previous distance selling regime must check whether they are affected by the reform.
What are the consequences for the seller?
If it meets the characteristics of an intra-Community distance selling, this transaction will be subject to VAT in the country of consumption of the goods, i.e. the country where the consumer has the goods delivered.
The seller’s information systems will have to be able to determine which regime is applicable to each sale, which implies being able to redraw the destination of goods sold, country by country. It will also be necessary to be able to manage the return of goods or credits granted to rectify the VAT declared and paid.
This informations will have to be archived to prove the correct application of VAT in both Member State of departure and the Member States of supply.
The implementation of this VAT system therefore requires an analysis of sales flows and the adaptation of information systems.
