from Annika Fischer
Anyone who wants to benefit from the European Single Market must know and observe the EU VAT system. This VAT system will undergo extensive changes on 1 July 2021 as part of its reform. With VATRules from eClear to automate your VAT obligations, you lay the foundation to secure and/or scale your cross-border EU e-commerce business. On 1 July 2021, the second stage of the VAT e-commerce package will be implemented. The measures included are designed to reform the EU's confusing and derogatory VAT system, making it simpler, more robust and more fraud-proof.
The new rules take into account technological developments, changes in business models and the globalisation of the economy. And, of course, they are supposed to bring money into the tax collector’s office. - The Commission estimates that before the reform, the EU states would lose tax revenues of around 150 million euros every year.
What do the measures mean for your online business?
One of the most relevant innovations for merchants is the abolition of the delivery thresholds, which vary from one EU country to another. Until now, the delivery thresholds for e.g. France, Italy or Austria were 35,000 EUR each, for sales to the Netherlands or Germany 100,000 EUR each. Up to these thresholds, merchants could pay the VAT due on their consignments in their own country. Only when these thresholds were exceeded the VAT had to be paid and reported in the country of destination.
However, these delivery thresholds will now be abolished on 1 July 2021 and replaced by an EU-wide threshold. This new threshold amounts to EUR 10,000 (for all EU countries together; not per EU country!). So as soon as your cross-border sales to consumers within the EU (net turnover) exceed this amount, you must register for VAT purposes in the destination countries, apply the current VAT rates and pay and report the VAT to the competent tax authorities.
Standard rate? Reduction? Exemption?
But how are your products actually taxed in the EU countries? Do they follow the regular tax rate or the reduced rate? Are they even tax-free or subject to an exemption? This is where VATRules comes into play.
eClear's database knows all the VAT rates and rules you have to apply in the EU-27 as well as the UK, Norway and Switzerland and assigns them to your product groups. Thanks to core integration, you can access VATRules directly in your plenty backend. Fully automated, the tax rates are delivered on demand and embedded in your order processes. To use VATRules, download the eClear plugin from the plentymarket marketplace (click here for full instructions).
Scaling your business by quickly entering new markets and additional product ranges
With VATRules you always apply the currently valid tax rate when calculating your product prices. Updates or temporary changes are automatically taken into account. This minimises your cost and time efforts, as corrections are significantly reduced. Because of correctly calculated VAT, you can optimise your prices and margins, especially according to local conditions. Once you have classified your product groups, you can quickly enter other markets or even new product ranges.
Automate your VAT obligations
eClear's plugin not only offers access to VATRules. Since last year, ThresholdControl is already available to plentymarkets merchants. With ThresholdControl you can easily break down your sales by country of delivery and thus analyse your cross-border business development. If you are unable to estimate how the abolition of delivery thresholds will affect your cross-border business, check your previous transactions with (the free) ThresholdControl.
eClear and plentymarkets started their cooperation in 2020. After VATRules and ThresholdControl, the next integration of eClear's automation solutions is already scheduled for summer 2021: ClearVAT. The full-service solution for automated VAT clearing will then take over the collection of total receivables from your B2C customers from other EU countries as well as the reporting and payment of VAT to tax authorities in the respective countries of destination. With ClearVAT you sell your products to all EU countries registration-free, VAT-free and liability-free (eClear frees merchants from the risk of an audit abroad).
Further information: https://ecle.ar/plenty-en
Webinar with eClear
Title: „E-Commerce Package 2021: What to know and which rules to follow“
When: May 11th at 1:30 p.m.
Register now: https://bit.ly/3tszv8e