VAT in the Digital Age for the Single VAT Registration

Luca Clivati
March 7, 2023

The EU Commission’s VAT in the Digital Age proposals include a single VAT registration to ease cross-border trade.

Due to enter into force on 1 January 2025, the proposals are part of the commission’s initiative to modernise VAT in the EU. The single VAT registration proposals would mean only registering for VAT once across the EU under a wider number of in-scope transactions, reducing VAT administration costs and time.

B2C implications of the single VAT registration

The One Stop Shop (OSS) is a pan-EU single VAT registration. While optional, it can be used to report and pay the VAT due on Business to Consumer (B2C) distance sales of goods and B2C intra-community supplies of services in all EU Member States.

The scheme has been well-received and implemented by many companies. There are discussions of broadening the scheme to further simplify VAT in the region.

To further modernise the EU VAT system, the Commission has proposed an expansion of the OSS scheme for e-commerce to include:

  • B2C domestic sales of goods in EU Member States
  • B2C installation or assembly supplies of goods on board ships, aircraft or trains
  • B2C supply of gas, electricity, heating and cooling
  • B2C supplies of second-hand goods supplied under the margin schemes, works of art, collector’s items and antiques
  • Intra-EU movement of own goods, assuming that the final customers will be a private individual

Implications for online platforms selling into the EU

Despite rumours of altering the Import One Stop Shop (IOSS) threshold, the current EUR 150 consignment threshold for imported B2C sales will remain  for the foreseeable future. The scheme will also stay optional for businesses.

However, IOSS will become mandatory for platforms facilitating non-EU distance sales of goods under EUR 150 for low value consignments. The EU will enhance the security of IOSS by granting EU customs authorities access to information about IOSS-registered businesses.

B2B implications of the single VAT registration

Regarding Business to Business (B2B) supplies, the EU Commission wants to harmonise the application of the extended reverse charge in article 194 of the EU VAT Directive. When implemented in the EU Member State, it applies to non-resident suppliers and reduces their obligation to register in a foreign country for VAT purposes.

Currently, only 15 EU Member States apply the article mentioned above – and not all in the same way.

Introduction of the new mandatory B2B reverse charge will be for certain sales of goods and services if transactions meet the following conditions:

  • The supplier is not established in the Member State in which the VAT is due
  • The purchaser/recipient is VAT registered in the EU Member State in which the VAT is due
  • The supplies do not fall within a margin scheme

Finally, the EU will abolish provisions in the VAT Directive regarding call-off stock arrangements from 31 December 2024. Beyond this date, new stock transfers under those arrangements cannot be affected as the simplification will not be needed. However, goods supplied under pre-existing arrangements can continue with the regime until 31 December 2025.

Are you equipped to tackle ever-evolving regulations?

Get in touch for expert help with easing your business’s VAT compliance burden, reviewing your Tax Code mapping and verifying how you can improve your cash flow. If you want to learn more about VAT in the Digital Age have a look at VAT in the Digital Age for digital reporting and e-invoicing or at this blog about the platform economy and VAT in the Digital Age.

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Luca Clivati

Luca joined Sovos in 2022 and is a senior manager of the consulting team within Compliance Services. He holds a Master’s degree in International Economics and has 13+ years of experience on cross-border transactions and international VAT and GST. Luca specializes in tax consulting advisory focusing on indirect taxes, diagnosis, solution, development and implementation of clients’ tax requirements, VAT compliance and tax due diligences within the EU and in jurisdictions outside of it (mostly Norway, Switzerland, New Zealand, Australia and Singapore).
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