As of July 1, 2021. cross-border sales of goods to consumers in the EU, where the shipment is arranged by or at the expense of the supplier, are subject to VAT in the country to which the goods are shipped or transported.
VAT modernization in cross-border e-commerce vs. solutions proposed in various ERP systems for small and medium-sized enterprises.
The new VAT billing rules for e-commerce sales primarily concern:
- Suppliers of goods to consumers in European Union countries
- Dostawców usług logistycznych importujących towary o wartości nieprzekraczającej 150 euro
- Prowadzących platformę internetową lub rynek do transgranicznej sprzedaży towarów konsumentom w UE
In order to simplify VAT accounting, a single EU VAT declaration at the one-stop shop (“One Stop Shop”) has been introduced as part of the e-commerce package. This will replace the VAT registration requirement in each country where sellers sell to EU consumers. The existing obligation to register in all countries is often cited as a major barrier to cross-border trade in the EU.
Filing an OSS return is in addition to the regular national VAT return. Sellers will charge VAT at the rate applicable in the customer’s country of residence, which they can determine through the delivery address to the customer. They will then determine the correct VAT rate, as well as apply reduced or zero VAT rates, according to the differing rates and classifications of goods in each of their customers’ member states.
Vendors who are not resident in the EU can also take advantage of the simplified filing of OSS forms. They must first register as a “non-EU” taxpayer with the tax authority of any EU member state. They can then file quarterly OSS forms, just like all online sellers in the EU. There is a requirement to file a regular national VAT return in at least one EU member state.
Until now, small and medium-sized companies that did not exceed the annual turnover threshold (depending on the country, the threshold ranged from €35,000 to €100,000) benefited from a special simplification of VAT registration for e-commerce, and thus were not required to register VAT with the tax office in the destination country. Now only companies selling B2C goods and services abroad for less than €10,000 per year ( condition: the amount was not exceeded in the previous calendar year as well) will be exempt from filing OSS returns. Instead, they will be able to charge the domestic VAT rate and report sales below this threshold in their regular domestic VAT return. This relief is not available to non-EU companies – those must register immediately.
Solutions offered by ERP class systems
SAP Business One is business management software for small and medium-sized enterprises , sold by the German company SAP SE . As an international solution – compliant with the laws and regulations of 40 different countries, available in 27 languages and compatible with a wide range of currencies, it allows you to save valuable time, make quick business decisions, and ultimately grow your business and increase profits.
The diagram below indicates the steps needed to properly configure the system to meet the new requirements.
One-Stop-Shop regulation is solved similarly in Lexbizz, a German ERP system also dedicated to SMEs in Germany. The system is based on Acumatica’s proven, industry-specific solution and is optimally adapted to German SMEs. The business platform combines classic ERP core functions – such as purchasing, sales, warehouse management and financial accounting – with industry and interface extensions – such as HR, logistics or e-commerce. This makes it possible to map all business areas into a single system.
The following instructions explain how to configure the Lexbizz system for intra-community remote sales.
What action do you need to take regarding the VAT modernization for cross-border e-commerce?
Carefully check whether the new VAT accounting rules for e-commerce sales apply to your business model
Check whether VAT registrations in other EU countries can be completed to reduce the administrative burden
Establish a process for producing proper, timely and efficient VAT reports.
Check what solutions your ERP system offers, and if necessary use the integrations offered in the market.
In case of problems, write to us 😉.
