Marketplace eGuide: Practical implications of EU e-commerce VAT rules

As of July 1st, 2021 cross-border e-commerce VAT rules have been modernised in the EU. The new legislation introduces substantial new VAT liabilities and compliance requirements for both online merchants and marketplaces/multi-seller platforms facilitating sales to EU private consumers. The legislation puts an end to governments missing out on indirect tax revenue from distance sellers and creates a VAT level playing field for businesses. However, it brings with it considerable complexities for marketplaces. To avoid being non-compliant, these marketplaces must ensure a series of additional
measures. This guide aims to look at the new VAT rules for marketplaces and the practical implications they can have on a marketplace business.

The legislation covers 6 key areas of change, all of which are directly relevant to
marketplaces. Key areas of change for marketplaces:

• All remote sales to consumers are taxable for VAT in the country of destination where
  the consumer resides
• Marketplaces are deemed suppliers for VAT purposes in specific scenarios and must
  charge VAT as applicable
•  The VAT exemption on imports of low value goods no longer applies
• A pan-EU sales threshold for VAT replaces individual per-country thresholds
• The launch of Import One Stop Shop (IOSS) and One Stop Shop (OSS) schemes, reducing
  the need for multi-country registration and reporting
• Additional record-keeping regulations for marketplaces where they are