The European Union (EU) is making important changes to its value-added tax (VAT) rules, which come into effect on July 1, 2021

The European Union (EU) is making important changes to its value-added tax (VAT) rules, which come into effect on July 1, 2021

(UPDATED July 1st 2021)

Dear customers,

Wanderlust by T.S.L Team wants to inform you of some changes by The European Union (EU) government from July 1st, 2021 that will affect all the orders from customers in the EU countries.

All the orders (even the ones below 150€) will have to pay VAT taxes. There are two ways to pay those taxes: Automatically when you checkout your order (and Shopify will return them to the EU government) or pay them when you receive the product. Wanderlust by T.S.L Team decided is better to charge the VAT taxes at the delivery time.

We are going to try to work like that and we will have a two week trial period from July 1st. Please, be patient and contact us if you have any questions. Thank you so very much for your understanding.

This is the official information we have received from Shopify:

The European Union (EU) is making important changes to its value-added tax (VAT) rules, which come into effect on July 1, 2021. This will impact businesses that sell across EU country borders (also known as distance sellers) and businesses exporting goods to buyers in the EU.

These changes will lead to simpler procedures and reduced administration, as well as possible broader implications for how merchants conduct business in the EU. This guide provides an overview of the significant changes coming, how they will impact merchants selling to buyers in the EU, and how to update tax settings in Shopify to comply with these changes.

What are the changes to intra-EU distance sale of goods?

There are three major changes that impact the VAT threshold, the rate applicable for cross-border orders, and tax filing for EU businesses:

  • Ending distance selling thresholds rules. Currently, EU merchants have to register for VAT in other EU countries as soon as they reach a certain country-specific threshold. For example, €100,000 for Germany and €35,000 for France. On July 1, these distance selling thresholds will be withdrawn. Cross-border sellers will be required to charge the VAT rate of the buyer’s country of residence from their first sale, unless the micro-business threshold applies.
  • New EU-wide threshold for micro-businesses. There is a new exemption for micro-businesses established in one EU country with sales no greater than €10,000 in each of the last two years. Merchants who qualify for this exemption can continue to charge the local VAT rate of the EU country where shipment originates for all EU countries they ship to, and continue remitting to their local tax authority. 
  • One-Stop Shop (OSS) filing. Merchants can now file a single VAT return known as OSS filing that works for multiple EU countries, which does not require an individual tax registration for each of those countries. Merchants can use OSS to file and remit VAT for any EU country they ship to, provided it is not their home country, or a domestic supply in a country where they have a physical location or hold stock. For these noted countries, merchants should instead continue filing a local return. OSS simplifies the filing process and saves them from the trouble of registering in multiple countries. The merchant needs to submit an electronic quarterly VAT return via their domestic OSS portal and ensure they keep records for all eligible OSS sales for 10 years.

As of July 1st, 2021, Shopify will automatically update tax settings to charge the VAT rate of the buyer’s shipping country for sales within the EU. Merchants based in the EU who qualify for a micro-business exemption and wish to continue to charge VAT based on the rate of your home country, you’ll need to update your tax settings in Shopify to reflect this.

For those who do not qualify for the micro-business exemption, you have the option to either submit a single VAT return for all of the EU (One Stop Shop filing), or remit a separate VAT return for every EU country that you ship to (Country specific registration). Update your tax settings in Shopify based on the choice that makes the most sense for your business.

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