New VAT rules for Europe starting from July 1st, 2021
New regulations for distance selling in the European Union
On July 1, 2021, the VAT rules applicable to distance selling and more broadly to end customers (B2C) E-commerce will be profoundly modified for all European Union (EU) countries.
Distance selling within the EU means the sale of goods which are transported or dispatched by the seller of the product from one EU Member State and delivered to a private customer located in another EU Member State. Distance selling within the EU also includes sales for which the seller does not carry out the transport or delivery themself, but has it carried out by others (on behalf of the seller).
In the case of distance selling within the EU, the buyer must be a private individual (final consumer – B2C). The regulation therefore does not apply to entrepreneurs (B2B) who purchase the goods for their business. It also does not apply to legal persons holding a VAT identification number, VAT ID no. (e.g. local authorities or associations).
If the customer does not have a VAT ID number – as this is the case for private consumers or end customers – the rules on distance sales within the EU apply starting from July 1st, 2021, i.e. the sale is subject to VAT in the country of destination.
Mad4One has already set up its online shop in compliance with this new rule and starting from 1.7.2021:
The Italian VAT (22%) will be applied only to sales to end customers with delivery to Italy,
Supplies to all other EU countries will be subject to the VAT rate of the country of destination.
In summary:
EU rules up to June 30th, 2021
Sales to end consumers in all EU countries are subject to the VAT rate of the supplier's country (where the circulation of goods started) in our case Italy. Therefore the VAT rate applied is 22%.
EU rules as of July 1st, 2021
According to the new distance selling rules, the sales tax relocation takes place at the end of the movement of the goods, this means in the country of destination.
Below some examples:
Sales to end consumer in Italy → VAT 22 %
Sales to end consumer in Germany → VAT 19 %
Sales to end consumer in France → VAT 20 %
Sales to end consumer in Denmark → VAT 25 %
Sales to end consumer in Spain → VAT 21 %
Sales to end consumer in Austria → VAT 20 %