EU delays 2021 e-commerce OSS VAT reforms to July 2021

The European Commission has proposed 8 May that the EU VAT e-commerce package, launching 1 January 2021, should be delayed by 6 months until 1 July 2021. The postponement is due to the disruption caused by the COVID-19 epidemic.

It is almost certain the EU Parliament and Council will adopt these proposals. Countries like Germany and the Netherlands were warning that they were behind on the reforms even before COVID-19 took hold in Europe in March.

The e-commerce package is aimed at reducing an estimated €5billion per annum in online VAT fraud, set to hit €7billion next year.

The package contains the following main measures:

• Extension of the MOSS return to e-commerce goods and a new OSS return;
• Ending distance selling threshold rules;
• Withdrawal of the €22 VAT free exemption on low-value consignments;
• Introducing the Import One Stop Shop (IOSS); and
• Making marketplaces the deemed supplier for VAT on some of the transactions they facilitate.
• Extending the OSS return to sales of services to consumers.
• introducing a €10,000 EU-wide threshold for micro-businesses for all of the above new rules.