B2C Cross-border seller in the EU

EU established companies which are involved in cross-border supplies of goods to private persons (consumers/B2C supplies) will likely be required to charge local VAT in more countries: the current existing thresholds for B2C distance sales to other EU member states will be replaced by one combined EU threshold. Companies that exceed this threshold need to charge local VAT in all countries where their B2C customers are located.

How does it work

This means that information on the applicable VAT rates for all countries where their B2C customers are located needs to be gathered and included in the master data of the ERP system. New tax codes might be needed and it might be required to extend the current VAT determination logic to facilitate the automatic tax determination for transactions subject to these new rules.

One-Stop-Shop system

The VAT due on the B2C cross-border sales in the EU can be reported and remitted through one single VAT return using the same logic as the MOSS (Mini-One-Stop-Shop system), which is currently used for B2C electronic services within the EU. This MOSS will be extended and converted to the OSS (One-Stop-Shop system), which will be used for both B2C cross-border services and B2C distance sales of goods.

Specific set-up of your ERP system is required to facilitate this reporting obligation, e.g. by making a distinction between the country where the reporting needs to take place (the OSS reporting country) versus the country where the transaction is taxable (the tax reporting country). Furthermore, use of the OSS may lead to deregistration for VAT purposes in other EU countries.