The European Commission aims at simplifying VAT obligations for companies carrying out cross-border sales of goods or services (mainly online) to final consumers and to ensure that VAT on such supplies is paid correctly to the Member State of the customer, in line with the principle of taxation in the Member State of destination.

Since 2015, a simplified system ("MOSS" mini-one-stop-shop) is in place to declare and pay VAT on business-to-consumer (B2C) supplies of telecommunications, broadcasting and electronic (TBE) services in the EU. From 1 January 2021, the MOSS scheme will be extended to the e-commerce - to distance sales of goods and to all other B2C cross-border services of which the services are deemed to take place in the Member State of the customer. This simplification is going to be the "OSS" one-stop-shop scheme.
Currently, if a company sells goods via an online shop to consumers (B2C) located in other Member States and the threshold of the distance sales is exceeded (in most Member States the thresholds are €35,000 or €100,000), the supplier is obliged to charge local VAT in the Member State of the customer. This implies that the supplier is obliged to request a local VAT identification number in the Member State of the consumer, which is for many companies an administrative nightmare. However, under the OSS scheme supplier will no longer be required to have multiple VAT identification numbers for the (online) sale of goods to end customers in different EU Member States.

Closing the import VAT exemption loophole
From July 2021, the €22 VAT exemption on small parcels being imported into the EU for delivery to consumers will be withdrawn. This exemption has been heavily abused by many third country sellers.
So far, those sales have not been identified as distance sales within the meaning of Directive 112/2006, but are recognised as standard import of goods. To fight against unfair practices in the trade in goods, the European Commission has decided to extend the OSS scheme under certain conditions to sales of goods imported from third countries. Basically, the changes provide that VAT must be charged at the point-of-sale for consignments not exceeding €150. This VAT may be declared and paid via a new submission, the 'Import One Stop Shop' (IOSS).
When using this IOSS scheme, sellers will need to charge and collect the VAT from EU customers when the payment for the goods has been accepted. The total EU VAT will then need to be declared and remitted in a single monthly VAT return submitted to the member state where the seller is registered for the import scheme. A supplier established outside the EU making use of the I-OSS scheme will be obliged to appoint an intermediary (fiscal representative), unless he is established in a country with an agreement on mutual assistance with the EU.
If the intrinsic value of the imported good is more than €150, a full customs declaration will be required.

Source: written by Forcetax team.