Overview

On 1 July 2021 the European Union introduced a comprehensive VAT overhaul called the “European E‑commerce Package.” The reform removed the historic distance‑selling thresholds, broadened VAT coverage for low‑value imports, and added two electronic filing schemes. For Amazon sellers, third‑party marketplaces, and any business that ships products to EU consumers, the changes instantly alter how VAT is collected, reported, and enforced.

Key Points

• Threshold removal — The previous country‑specific distance‑selling limits (from €35 k to €100 k) no longer exist, so every cross‑border sale to an EU consumer now creates a VAT liability in the buyer’s member state.
• One‑Stop Shop (OSS) launch — Sellers may register for the OSS in a single EU country and submit one quarterly VAT return for all B2C sales across the bloc, eliminating the need for separate filings in each destination market.
• Import One‑Stop Shop (IOSS) for parcels ≤ €150 — Goods valued at €150 or less can be taxed at checkout through IOSS, allowing customs clearance without additional charges for the buyer.
• Marketplace liability expansion — Online platforms that facilitate sales exceeding €10 000 per year per seller must now collect, remit, and report VAT on those transactions on the seller’s behalf.
• Digital services VAT shift — The place of supply for all digital services is fixed to the consumer’s location, requiring sellers to apply the correct VAT rate for each EU country.
• Heightened audit focus — EU tax authorities have announced coordinated enforcement actions, increasing the risk of penalties for sellers who fail to comply.

How the VAT E‑commerce Package Works

1. OSS registration — A seller signs up for the OSS in one EU member state (commonly Ireland because of its English‑language portal). Example: A U.S. cosmetics brand sells to customers in France, Germany, and Spain, files a single quarterly OSS return in Ireland, and pays the three countries’ VAT rates through that portal.
2. Applying the buyer‑specific VAT rate — For every order, the seller must charge the VAT rate that applies in the customer’s country. : A handbag sold to a Dutch buyer incurs 21 % Dutch VAT, while the same model sold to a Swedish buyer carries 25 % Swedish VAT.