Member Article

Accordance launches E-Commerce and VAT Whitepaper

Pro-European cross-border VAT specialist Accordance has launched a whitepaper on the EU’s One Stop Shop (OSS) and its impact on e-commerce businesses, to help inform and prepare for the significant changes to rules on the VAT treatment of intra-EU business to consumer (B2C) goods due to be enacted in 2021.

Polling conducted by the organisation found that around two thirds (65%) of businesses have heard of OSS but know little about its practical details, while the vast majority (82%) hope that it will bring positive benefits to their companies but feel they lack information.

OSS is a major overhaul of the EU’s VAT policy. Recently delayed from January 1st to a proposed date of 1st July 2021 as a result of the Covid 19 pandemic, OSS is an expansion of the existing Mini One Stop Shop (MOSS) for digital service which aims to simplify cross border trade. It will replace existing national VAT distance selling thresholds - which range from €35,000 to €100,000 or equivalent - with an EU-wide threshold of €10,000.

It also determines that VAT will be due in the country of delivery, and impacts where suppliers must file VAT returns – from 2021, this will be a single OSS return in the Member State of Identification (MSI). Significant is that at the same time as introducing OSS, the EU is removing Low Value Consignment Relief (LVCR), which means that non-EU businesses will compete on equal footing with EU companies in having to account for VAT on all their sales.

Accordance’s whitepaper outlines key information on the purpose and potential complications of OSS for e-commerce, while offering practical guidance to businesses on what steps and transitions must be taken should they wish to use the non-obligatory system from 2021.

Andy Spencer, Director of Professional Services of Accordance, says: “Although the intention of OSS is to simplify compliance and the removal of LVCR aims to facilitate a level playing field between EU and non-EU businesses, they have the potential to cause a raft of problems for businesses who are under prepared.”

“The delay to the implementation of OSS offers an unparalleled opportunity to businesses to prepare for this seismic shift for e-commerce companies. There is a clear imperative to plan, review supply chains and take Covid-19 related business fluctuations into careful account, to ensure seamless trading in the new year and beyond.”

The Whitepaper provides clarity on the three variations OSS encompasses: Union OSS for supplies of B2C goods, sales by intermediaries and EU businesses supplying B2C services; Non-Union OSS for non-EU businesses supplying B2C services; and Import OSS (IOSS) for imports of goods into EU below €150.

Alex Smith, VAT Consultant at Accordance, said: “As with many EU VAT simplifications, there are ten questions raised for every answer given. OSS has great potential, but businesses must carefully review their supply chains and rethink pricing structures as it may lead to increased VAT liabilities.”

“Our Whitepaper lays out the most important things to consider and the crucial actions to implement. We know that several events are occurring with the potential to affect e-commerce businesses and we pledge to offer all the timely practical information we can to assist though this complicated time. As always, being prepared in advance is essential.”

The EU will release more detailed information on OSS in the coming months. Until such time, uncertainty remains with regards supplementary declarations, frequency of audits and the provision of transactional data. The whitepaper explores these themes while seeking to offer businesses practical advice and guidance on how to mitigate the impact and exploit the benefits of the changes.

This was posted in Bdaily's Members' News section by Accordance VAT .