New rules for value added tax (VAT) calculation for web shops in EU will start to apply. They will come into force on 1st July 2021 and will handle remote selling of products. What will be the changes which will affect the web shop?
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Web shop and cross-border sales of services – new regulations for VAT calculation with e-commerce!
If you open a web shop in Slovenia, you need to open a LTD company. For that you do not need specific education. Starting in the middle of 2021, changes regarding web shops will come into force. The new rules for VAT for web shops will come into force in the second half of this year. They plan to expand the use of the “one-stop shop” system for VAT. The system allows identification for VAT in one Member State. The VAT levied in the other Member States is therefore levied in the Member State chosen.
The mentioned system has so far been in use among providers of:
- telecommunications services,
- broadcasting services and
- electronically provided services,
Now, it will extend to other business-to-consumer services, online commerce within the European Community and some domestic supplies of goods.
Which changes affect web shops?
Existing threshold for online commerce or distance selling, below which the supply is still subject to VAT in the Member State where the taxable person providing those services is established or where the goods are listed at the time when the dispatch or transport of the goods begins, will be replaced by a threshold of € 10,000.
According to the new law, the VAT exemption for the import of small consignments of up to EUR 22 will be abolished for the web shops. Previously, it was considered that consignments of goods worth up to and including 22 EUR (excluding postage) are exempt from all duties upon import. For shipments worth from 22 to 150 EUR they charged only VAT. A new special arrangement for distance selling of goods imported from third countries with a real value of up to EUR 150 will exchange it now.
Among the promised benefits of the adopted rules, which also apply to web shops, is a significant reduction in cross-border VAT compliance costs, which will facilitate more cross-border trade and increase VAT revenue for Member States.
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