VAT for Cross-Border E-Commerce Transactions Change on 1 July 2021  

The European Commission has announced on 28 June 2021 that e-commerce taxation rules will change for cross-border EU e-commerce. The new VAT rules for online shopping enter into force on 1 July 2021 in order to both simplify cross-border e-commerce and ensure greater transparency for EU cross-border shoppers when it comes to pricing and consumer choice.

The new rules will apply to all:  

  • online sellers  
  • online marketplaces/platforms 
  • postal operators and couriers involved in online deliveries  
  • customs and tax administrations applying the tax regimes for online purchases  
  • individual consumers i.e., customers shopping online  

outside the EU/EEA.  

In brief, the changes are: 

  • VAT is now charged on all goods entering/imported into the EU from non-EU countries, irrespective of value.  
  • All e-commerce sellers based within or outside the EU/EEA, selling directly to consumers or via online marketplaces, need to have an EU VAT registration and pay VAT for all of their EU sales via a quarterly declaration.  

Indirect Taxation and Tax administration Value Added Tax – Explanatory Notes on VAT e-commerce rules
Published September 2020 

For consumers, the changes mean that VAT will feature as part of the total price paid directly to the seller, at the time of purchase and, therefore, not at destination, to customs authorities or courier services. In its communication, the Commission warns that, ‘If the supplier is not VAT-registered, you will need to pay the VAT and possibly some clearance fees charged by the transporter of the goods when goods are imported in the EU.’ It is believed that paying the VAT at source will also reduce fraud and improve the online consumer experience for online shoppers in the EU. 

Read the consumer factsheet on the changes here:  

New EU VAT rules from 1 July 2021

Read more about the changes impacting cross-border e-commerce here:

Vatecommerceexplanatory 28102020 En