The delivery of tangible movable property constitutes an intra-community distance sale when the purchaser, established in another Member State of the European Union is an individual or a person benefiting from the derogatory regime.
Under the current system, the tax is paid by the seller either in the Member State of arrival for sales made above a certain threshold (€ 100,000 excluding VAT or 35,000 excluding VAT), or in the Member State starting if sales do not reach this threshold.
This regime is reformed by directive UE / 2017/2455 of December 5th 2017. This modification, which we will present to you below, will come into force as of January 1st 2021.
I – Setting up a single threshold
Definition of the single threshold
In order to harmonize and simplify the system described above, Directive 2017/2455 sets a single threshold for turnover excluding VAT of € 10,000 applicable to all EU Member States for sales to intra-community distance of goods.
Thus, from 2021, when the transactions carried out by the taxable person do not exceed € 10,000 excluding tax, distance selling will be taxable in the Member State of departure of the goods, except for the option for the taxation of the transaction in the European State of destination.
When the transactions carried out by the taxable person exceed € 10,000 excluding tax, distance selling will be taxable in the Member State of destination of the goods (State of the final consumer).
Appreciation of the € 10,000 threshold
This threshold is defined excluding VAT, taking into account all the transactions referred to above provided to non-taxable persons established or having their domicile or usual residence in Member States other than that in which the taxable person is established, or has his domicile or habitual residence.
When, during a calendar year, the threshold of € 10,000 is exceeded, distance sales are taxable at the place of establishment of the final consumer from the day of this exceeding.
II – Principles of VAT taxation
Taxation in the Member State of establishment or domicile of the final consumer
Goods shipped or transported from one EU member state to another EU state as part of intra-community distance sales are taxed at VAT in the country of destination in two cases:
- when the total value of intra-Community distance sales of goods made by the taxable person exceeds € 10,000 excluding VAT during the current calendar year or has exceeded this threshold during the preceding calendar year;
- When the threshold of € 10,000 is not reached and the taxable person has opted for the taxation of intra-Community distance sales of goods to be located in the Member State of destination of the goods.
Taxable persons who carry out such transactions are authorized to receive or import free of VAT the goods they intend for a delivery whose place is located in the territory of another EU Member State.
These transactions must be shown for their total amount excluding VAT in the turnover declaration.
Option for the taxation of the transaction at the place of establishment of the final consumer
When the threshold of € 10,000 is not exceeded, the taxable person may opt for the place of intra-community distance sales of goods to be located in the Member State to which the goods are sold, dispatched or transported.
This option covers a period of two calendar years and is renewable by tacit agreement, unless terminated at the end of each period.
Creation of the distance selling system for imported goods
This is the delivery of goods made for the benefit of a taxable person or a non-taxable legal person whose intra-community acquisitions of goods are not subject to VAT (PBRD) or for the benefit of any other non-taxable person subject (CGI art. 256 bis, I.2 °), when the goods are shipped or transported by the supplier or on his behalf from a country outside the EU, or a territory considered as such, including when the supplier intervenes indirectly in the transport or shipment of the goods.
As with intra-community distance sales of goods, the system for distance sales of imported goods only applies to goods which are neither new means of transport, nor goods delivered after assembly or installation.
Principles of VAT taxation
From January 1st 2021, when the goods will be imported from countries outside the EU and the Member State of importation differs from the Member State of final destination of the goods, the place of delivery will be located at the location of the goods at the time of arrival, shipment or transport.
Consequently, it will be the territory of the Member State in which the acquirer is established or resides.
This new regime will therefore have the consequence of collecting VAT from the seller at the time of the sale.
III – Accompanying measures to facilitate the declaration and payment of VAT
Use of an electronic interface
From January 1st 2021, taxable persons who use an electronic interface (marketplaces, platforms or portals) in the context of distance sales of imported goods (see above) or intra-community distance sales for shipments of which the value does not exceed € 150, will be considered to have acquired and delivered the goods.
In practice, electronic interfaces will be liable for VAT when these facilitate distance sales of imported goods not exceeding € 150 or when they facilitate domestic deliveries.
In return, for all distance sales of goods imported from territories or third countries with a value greater than € 150, the platforms will only become liable for VAT when the place of VAT taxation of the imported goods will be not located in another Member State.
Use of a one-stop shop for distance selling of imported goods
The beneficiaries of this one-stop shop (from January 1st 2021)
The taxpayers who can use it are:
- Any taxable person established in EU territory making distance sales of goods imported from third countries or countries;
- Any taxable person established or not in the territory of the EU making distance sales of goods imported from territories or third countries and being represented by an intermediary established in the territory of the EU. A taxable person can appoint only an intermediary;
- Any taxable person established in the territory of a third country with which the EU has concluded a mutual assistance agreement and who carries out distance sales of goods imported from that third country.
When the taxable person avails himself of this special regime, he must apply it to all of his distance sales of goods imported from third territories or third countries.
Eligible transactions and tax payment mechanism
This special one-stop-shop regime will only concern distance sales of goods (only goods) imported from third territories or third countries, with exception of products subject to excise duty, corresponding to consignments of a value not exceeding 150 €.
For sales declared under this one-stop-shop, tax becomes payable at the time of delivery. The goods are considered to have been delivered when payment has been accepted.
The taxable person who will declare and pay VAT through this one-stop-shop will have to transmit electronically a VAT return monthly, even if no sale has been made.
The taxable person who will use this one-stop shop, or the intermediary, must keep a register of transactions falling under this special regime.
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