VAT: New EU rules applicable as of 1 July 2021

All amendments concern sales of goods to customers domiciled in a Member State other than the Member State of “origin” of the goods or sales of imported goods. Therefore, the rules applicable to direct sales to “domestic” customers (sales to Spanish customers of goods delivered from Spain or to customers in another Member State of goods already located there) remain unchanged.

1st New single EU-wide threshold

The existing thresholds for distance sales of goods to buyers in other EU Member States will be modified and the threshold will be raised to €10,000 for the whole EU. Below this threshold, Spanish VAT rules will continue to apply to your cross-border sales. If your sales are above this threshold, you will be obliged to pay VAT in the Member State where your buyers are located. But you can easily register with the One Stop Shop (OSS), where you can declare and pay VAT due in other Member States.

2nd End of import VAT exemption.

The VAT exemption for the importation of goods with a value not exceeding €22 will be eliminated. As a result, all goods imported into the EU will be subject to VAT. The Import One Stop Shop (IOSS) is created to facilitate and simplify the declaration and payment of VAT on distance sales of goods imported into the EU with a value not exceeding €150. By registering with the IOSS, your customers will see that the price they pay represents the final price, including VAT, with no additional charges or fees. Above €150 a full import declaration is required. If you do not register for IOSS, VAT will be paid by your customer when importing the goods into the EU. Postal operators or courier companies may charge the customer an additional clearance fee to collect this VAT and make the necessary arrangements at the time of import of the goods.

Particularities when sales are made through digital ‘platforms’.

This new regulation also has some particularities when it is carried out through a digital platform. In these cases, a legal fiction is established whereby the entity facilitating the sale acquires and resells the goods, but only in two specific cases:

1. Where it facilitates the distance selling of imported goods of a value of less than EUR 150, or
2. where it facilitates the supply of goods to final consumers in the Community by a trader or professional who is not established in the Community.

Where these rules apply, it shall be taken into consideration that the transport of the goods takes place on the occasion of the sale by the platform to the final customer, and in order to avoid double taxation or possible fraud, the following are exempted from taxation (i) the importation of the goods and (ii) the supply of the non-established operator to the platform, without this exemption adversely affecting the right to deduct the tax.

The accrual of both types of transactions shall take place upon acceptance of payment from the customer.