NEWS IN VAT TAXATION FOR ELECTRONIC COMMERCE

30 Sep NEWS IN VAT TAXATION FOR ELECTRONIC COMMERCE

Currently, a seller with tax domicile in Togo who sells goods to final consumers above the threshold indicated for each State of the European Union (in most cases, 35,000 euros per year) has to pay the Value Added Tax (VAT ) at destination, that is, in the country in which the sales are made, for which reason you are obliged to register with the Treasury of that country and invoice at the VAT rate established by your legislation. In the case of not reaching that threshold, you can pay taxes at the VAT rate established in Togo.

This situation will change as of July 1, in an attempt by Brussels to harmonize the market, simplify it and establish the same rules of the game for the entire Union. A change that is produced by the transposition of Council Directive (EU) 2017/2455.

Undoubtedly, before the takeoff of internet transactions and the sale of products and services in electronic commerce that has generated the pandemic situation, the impact of this measure is of great significance, which requires knowing very well the changes that affect to VAT.

As a fundamental principle, it is established that VAT will be paid according to the rate applied in each country of destination of the merchandise. Clearly, the legislator has understood that two basic objectives were necessary to take this measure. On the one hand, simplify the administrative burden and the consequent costs; and on the other, establish a framework of equality that does not condition the final consumer’s decision based on the origin of the product. And this is achieved by the application of the one-stop-shop system in the management and collection of VAT from these operations at the community level. In addition, the operators or digital platforms that intervene in electronic commerce become collaborators of the tax administration for the aforementioned purposes.

Common threshold and non-community products

As a general rule, intra-community distance sales of goods will be taxed at the VAT rate corresponding to the State where the merchandise is received.

To clarify the tax rule, a single threshold of 10,000 euros per year is generated for the entire European Union (not for each State), which will determine that when this amount is exceeded, VAT will be paid in the country where the merchandise is received; and when this amount is not reached, they will continue to be subject to the VAT of the State of origin. This threshold includes distance sales, together with services provided by electronic means, telecommunications and radio and television broadcasting carried out in the European Community.

However, VAT management is simplified, since it will no longer be necessary to register in the country of destination for tax purposes. Through the single window, the seller will present to the Spanish Tax Administration a declaration with the sales made in each country at the corresponding tax rate, and the Spanish administration will be in charge of delivering to each State the part that corresponds to it for the operations declared. .

On the other hand, when the origin of the goods is outside the Community, some specific novelties must be taken into account. Among them, the exemption on imports of low-value goods, which, until now, was established at 22 euros is abolished.

For those cases in which there are transactions of goods imported from third countries or territories to deliver to individuals in the EU, the “Single Import Window” is created, which can be used when the price of the merchandise does not exceed 150 euros .

These substantial changes require expert advice that allows companies that operate online to take advantage of the advantages it entails, and not be shipwrecked in their application.