VAT ON EUROPEAN ONLINE SALES
Changes in distance sales
As of July 1, 2021, changes will be made to the distance sales regime. For these purposes, the limit from which the VAT of the destination country is applicable is unified at 10,000 euros in all countries.
Special regime
Sales to individuals in the EU. If your company delivers products to individuals (end consumers) from other countries of the European Union, in general, you must charge them Spanish VAT (in these cases there is no VAT exemption, unlike what happens when the customer is a company). However, if certain requirements are met, the “distance sales regime” will apply, and the VAT of the country of destination must be passed on and paid to the Tax Administration of said territory.
Requirements. In particular, your company will be in this situation if it meets the following requirements at the same time:
That the goods it sells are transported from Spain to the country of the individual who acquires them. Attention! If the individual traveled to Spain and acquired them in our country, the sale would carry Spanish VAT.
That said transport is carried out on behalf of your company.
And that, during the previous year or the current year, the volume of sales of this type made by your company to the same EU country has exceeded the limit established in that territory. Note. If you meet these requirements, for the sales you make to individuals in that country, you must apply the VAT of that territory.
Limits by country. Currently, for this distance sales regime to be applicable, each country has a different limit established. Note. Thus, for example, if your company sells to individuals in Germany, it will be obliged to register in the census of entrepreneurs in that territory and to charge German VAT when its sales exceed 100,000 euros. On the other hand, in Italy and France the limit is 35,000 euros.
Changes: July 1, 2021
Single limit of 10,000 euros. Well, as of July 1, 2021, the previous limits are homogenized. In this way, if the sales made to individuals in the same country in the previous year or in the current year reach 10,000 euros, your company must already apply the VAT of that territory. Attention! Although this change was scheduled to be introduced from January 1, 2021, due to the health crisis, its entry into force has been postponed for six months.
Mini one-stop shop. On the other hand, and to facilitate the application of this regime, it will no longer be necessary for your company to register with the Tax Administration of each of the countries to which it sells (as is now the case). Note. To enter the VAT quotas charged in each country, you can avail yourself of a “mini one-stop shop” system, like the one that already exists for companies that provide electronic services to individuals in the EU. Thus, your company will be able to settle all the VAT that is passed on in the EU through the Spanish Treasury (this being the one in charge of transferring the corresponding VAT to each territory).
Brexit
Exports. If your company sells to individuals in the UK, the distance selling scheme now applies to you when your sales exceed £ 70,000 (which is the UK threshold). Attention! Well, remember that, as of January 1, 2021, the transitional period ends during which the United Kingdom continues to be subject to EU regulations. Therefore, as of that date, all sales made to said territory will be considered exports and will be exempt from VAT.
As of July 1, 2021, the limit from which the VAT of the destination country must be passed on to sales to individuals is unified at 10,000 euros. Adapt your company’s billing for this important change.
