In this article, we discuss the main changes which will impact Swiss sellers as of 1 July 2021, who are selling via their own web shops and shipping goods to EU consumers (B2C sales) from warehouses located in the EU.
What is the current situation?
Currently, Swiss sellers using warehouses in the EU should register for VAT purposes in the EU Member State where inventories are held. If these sellers ship goods from a warehouse in one EU country to consumers in another EU country (“distance sales”), the sellers can report these sales using the VAT registration in and rate of the country of dispatch, provided that the sales do not exceed the annual “distance sales threshold” in the country of arrival. Every EU country sets a distance sales threshold and if sellers exceed the threshold, they must register for VAT in that country and charge VAT using the rate of the country of arrival. The current distance sales threshold in all EU countries is approx. EUR 35,000 (or the equivalent of a national currency), except in Germany, Luxembourg and the Netherlands which set the threshold at EUR 100,000.
Removal of distance sales threshold
As of 1 July 2021, the annual distance sales threshold will be removed. By default, VAT on intra-EU distance sales will be charged at the rate of the country of arrival. This means a Swiss seller selling into all EU jurisdictions would potentially need to register for VAT in all 27 EU Member States to account for the VAT on intra-EU distance sales.
One-Stop-Shop (“OSS”) regime
In order to simplify the VAT reporting, the EU will introduce a new reporting system called OSS.
A Swiss seller can register for the OSS scheme in the EU country of dispatch (“the country of identification”) and can then submit quarterly OSS VAT returns to declare VAT on intra-EU distance sales to the other 26 EU countries. The seller will make quarterly VAT payments to the country of identification. The tax authorities in the country of identification will distribute the VAT to the other 26 EU countries in accordance with the OSS VAT returns submitted.
Sellers still need to keep the VAT registrations in all the EU countries where inventories are held, to account for VAT on transactions other than intra-EU distances sales, e.g. purchases (incl. imports) and domestic sales.
How do you register for the OSS regime?
KPMG is developing a solution to help Swiss sellers to use the OSS regime. If you are interested in learning more about the upcoming changes as of 1 July 2021 and our services, please reach out to us.