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The VAT e-commerce package is now fully complete with adoption on 12 February 2020 of Commission Implementing Regulation (EU) 2020/194. This Regulation provides the details for the registration in the VAT One Stop Shop, including the Import One Stop Shop, and for the VAT One Stop Shop return. 

On 21 November 2019, the Council adopted new detailed measures that will pave the way for a smooth transition to new VAT (Value-Added Tax) rules for e-commerce that come into force in January 2021.

• Council Directive (EU) 2019/1995 amending Directive 2006/112/EC as regards provisions relating to distance sales of goods and certain domestic supplies of goods
• Council Implementing Regulation (EU) 2019/2026 amending Implementing Regulation (EU) No 282/2011 as regards supplies of goods or services facilitated by electronic interfaces and the special schemes for taxable persons supplying services to non-taxable persons, making distance sales of goods and certain domestic supplies of goods

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.

The Commission proposed EU legislation in this area in two stages. The first measures entered into force in 2015 and covered telecommunications, broadcasting and electronic services. The second package of measures was adopted by the Council in December 2017 and included new rules for distance sales of goods as well as for any type of service supplied to final customers in the EU. The latter measures, also referred to as ‘the VAT e-commerce package’ will apply from 2021.   

 

1. Mini One Stop Shop (MOSS)

Since 2015, a simplified system is in place to declare and pay VAT on business-to-consumer (B2C) supplies of telecommunications, broadcasting and electronic (TBE) services in the EU. Detailed information on the functioning of MOSS is available on the MOSS portal.

 

2. The VAT e-commerce package

The VAT e-commerce package was one of the priorities under the Digital Single Market Strategy.

On 5 December 2017, the Council adopted the VAT e-commerce package consisting of:

• Council Directive (EU) 2017/2455
• Council Regulation (EU) 2017/2454
• Council Implementing Regulation (EU) 2017/2459

On 21 November 2019, the Council adopted the implementing measures for VAT e-commerce package consisting of:

• Council Directive (EU) 2019/1995
• Council Implementing Regulation (EU) 2019/2026

On 12 February 2020, the Commission adopted the Implementing Regulation (EU) 2020/194 laying down details on the working of the VAT One Stop Shop. 

• Read the Press Release
• Q&A on VAT for e-commerce
• Commission Proposal COM(2016)757
• Commission Proposal COM(2018) 819
• Commission Proposal COM(2018) 821
• Impact Assessment
• Read the Factsheet for the proposal

 

Overview of the package

The VAT e-commerce package will facilitate cross-border trade, combat VAT fraud and ensure fair competition for EU businesses. The new rules include:

 

• Improvements of the current MOSS
• Special provisions applicable to supplies of goods facilitated by electronic interfaces
• Extension of the scope of the MOSS, turning it into a One Stop Shop (OSS), to:

- B2C supplies of services other than TBE services

- Intra-EU distance sales of goods

- Certain domestic supplies of goods facilitated by electronic interfaces

- Distance sales of goods imported from third countries and third territories in consignments of an intrinsic value of maximum EUR 150

 

The VAT e-commerce package and implementation calendar

The VAT e-commerce package will be implemented gradually. Below is an overview of the key-dates:

 

In 2019

(see details on the MOSS portal)

• Introduction of two thresholds to simplify VAT obligations for microbusinesses and SMEs. First, an annual turnover threshold of EUR 10 000 for intra-EU cross-border supplies of telecommunications, broadcasting and electronic (TBE) services. Up to EUR 10 000 TBE supplies remain subject to the VAT rules of the Member State of the supplier. Second, an annual turnover threshold of EUR 100 000 up to which the vendor must only keep one piece of evidence (instead of two) to identify the Member State of the customer.
• For invoicing, the rules of the EU country of identification of the supplier will be applicable instead of the rules of the Member States of consumption (i.e. of the customer).
• Close a gap in the current MOSS: a business not established in the EU but having a VAT registration in the EU (e.g. for occasional transactions) can make use of the non-Union scheme (i.e. the scheme for taxable persons not established in the EU).
• Some improvements of the current MOSS enter into force on 1 January 2019, in particular those not having any IT impact.

 

In 2021

The extension of the MOSS and the special provisions concerning the obligations of electronic interfaces will enter into force on 1 January 2021 as IT systems need to be adapted or developed.

• Businesses operating electronic interfaces such as marketplaces or platforms will, in certain situations, be deemed for VAT purposes to be the supplier of goods sold to customers in the EU by companies using the marketplace or platform. Consequently, they will have to collect and pay the VAT on these sales.
• Building on the success of the MOSS for TBE services, this concept will be extended and turned into a OSS:

- The non-Union scheme for supplies of TBE services by taxable persons not established in the EU will be extended to all types of cross-border services to final consumers in the EU;

- The Union scheme for intra-EU supplies of TBE services will be extended to all types of B2C services as well as to intra-EU distance sales of goods and certain domestic supplies facilitated by electronic interfaces. The extension to intra-EU distance sales of goods goes hand in hand with the abolition of the current distance sales threshold, in line with the commitment to apply the destination principle for VAT;

- An import scheme will be created covering distance sales of goods imported from third countries or territories to customers in the EU up to a value of EUR 150.

Unlike today, when the import scheme is used, the seller will charge and collect the VAT at the point of sale to EU customers and declare and pay that VAT globally to the Member State of identification in the OSS. These goods will then benefit from a VAT exemption upon importation, allowing a fast release at customs.

The introduction of the import scheme goes hand in hand with the abolition of the current VAT exemption for goods in small consignment of a value of up to EUR 22. This is also in line with the commitment to apply the destination principle for VAT.

• Where the import OSS is not used, a second simplification mechanism will be available for imports. Import VAT will be collected from customers by the customs declarant (e.g. postal operator, courier firm, customs agents) which will pay it to the customs authorities via a monthly payment.

 

Who will benefit from this proposal?

• Businesses will benefit from a substantial reduction in cross-border VAT compliance costs. This will facilitate greater cross-border trade.
• EU Businesses will be able to compete on equal footing with non-EU businesses that are not charging VAT.
• Member States will gain through an increase in VAT revenues of EUR 7 billion annually.

 

 

We are at your disposal to assist you if any further information or clarification is needed.

 

Contact persons

 

Leonidas Papadopoulos                          Pavlos Tsiaklides
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+357 22 100 192                                        +357 22 100 192
Head of Accounting                                    Head of Audit

Fair Taxation: EU updates list of non-cooperative tax jurisdictions

On 18 February 2020 the EU Finance Ministers updated the EU list of non-cooperative tax jurisdictions. Four countries/territories – Cayman Islands, Palau, Panama and Seychelles – have been added to the list of non-cooperative tax jurisdictions, as they failed to comply with the required standards within the deadline. These joined the eight jurisdictions – American Samoa, Fiji, Guam, Samoa, Oman, Trinidad and Tobago, Vanuatu and US Virgin Islands – that were already on the list and remain non-compliant. By contrast, over half of the countries covered by the 2019 listing exercise have been completely delisted, as they are now in line with all of the tax good governance standards.

 

Next steps

The Commission and Member States will continue the dialogue with those jurisdictions on the list and the annex II (jurisdictions with pending commitments) in advance of the next update of the EU list in October 2020. Another priority is to monitor countries that have been cleared to ensure that they apply tax good governance in practice. The EU listing remains a dynamic process, which will continue to develop in the years ahead to keep pace with international developments. 

Following the update, Paolo Gentiloni, Commissioner for the Economy said: "The EU list of non-cooperative tax jurisdictions is helping to deliver real improvements in global tax transparency. To date, we have examined 95 countries' tax systems and the majority of these now comply with our good governance standards. This process has led to the elimination of over 120 harmful tax regimes worldwide – and dozens of countries have started to apply tax transparency standards. Our citizens expect the wealthiest individuals and corporations to pay their fair share in tax and any jurisdiction that enables them to avoid doing that must face the consequences. Today's decisions show that the EU is serious about making that happen.”

 

Objectives of the EU List

The overall goal of the EU list is to improve tax good governance globally, and to ensure that the EU's international partners respect the same standards as EU Member States do.

 

 

The listing process

The list is a result of a thorough screening and dialogue process with non-EU countries, to assess them against agreed criteria for good governance.

These criteria relate to tax transparency, fair taxation, the implementation of OECD BEPS measures and substance requirements for zero-tax countries.

 

The criteria were agreed by Member States at the November 2016 ECOFIN and used as the basis for a screening "scoreboard".

 

The EU-List

The countries in the list below are those that refused to engage with the EU or to address tax good governance shortcomings (situation on 7 November of 2019).

 

EU Member States will continue to monitor the situation, to ensure that jurisdictions implement their commitments.

Listed jurisdictions will be removed from the list once they have addressed EU concerns.

We would like to remind you that the collection of the contributions for the second and final stage will start on March 1st, 2020 and will include the complete implementation of the GHS.

*Contribution for employees will increase to 2.65% and for employers to 2.90%

 

The General Healthcare System (GHS) is modern, patient-centric healthcare system with the aim of delivering quality healthcare services to the Citizens of the Republic of Cyprus and Permanent residents of the areas controlled by the Republic of Cyprus.  

 

The main features of the system are:

• Universal coverage of the population
• Equal and equitable treatment of all beneficiaries
• Provision of a comprehensive package of healthcare services
• Freedom of choice of provider by the beneficiaries
• Social reciprocity

For the implementation of the GHS, a special fund was established for purposes of gathering the relevant contributions, and from which all payments to providers of healthcare services will be made. The GHS fund will be administered by the Health Insurance Organisation (HIO). 

 

When will the GHS be implemented?

According to the provisions of The General Healthcare System (Amending) Law of 2017, that the GHS shall be implemented in two stages.  

The first stage of GHS implementation, has already started on June 1st 2019, which provides for the introduction of outpatient healthcare, i.e. the provision of healthcare services by personal doctors and outpatient specialists, pharmacists and laboratories.

The second and final stage of GHS implementation, beginning June 1st, 2020, includes introduction of all the remaining healthcare services, i.e. inpatient healthcare and services, services offered by allied health professionals (clinical dieticians, occupational therapists, speech pathologists, physiotherapists, and clinical psychologists), nurses and midwifes, the accident and emergency departments, ambulance services, dentists, palliative healthcare services and medical rehabilitation services.

 

Who is paying for this?

The main GHS source of financing is contributions.  The payment of the contributions for the first phase has already started on 1 March 2019 and full implementation will follow on 1 March 2020.

 

The Contributors’ Categories are:

• Employees
• Employers
• State
• Self-employed
• Pensioners
• Income-earners
• Government Officials
• Persons responsible for the payment of remuneration to Government Officials 

The contribution rates for each category of contributors as they have been set by the General Healthcare System (Amending) Law of 2017 are the following:

 

 

For every natural person, the total maximum annual amount on which contributions will be paid is €180,000.

 

In case that the natural person is not a tax resident of Cyprus, he/she will pay contributions only for the income, earnings and pensions that derive from the Republic of Cyprus, excluding dividends and interest.

For more information you can visit the official site which is available both in English and Greek language.