Compatibility:

WebSite X5 Pro since version 2021.5

On July 1st, 2021 the EU introduced some important changes which affect the way VAT is managed in case of cross-border selling. If you have an online shop, and you sell abroad, or if you are planning on doing so, you should carefully collect all the needed information so to fulfil all the requirements. 


In this article, we will look at the main changed which entered into force with the new European regulation and, on top of that, how you can proceed to set up your e-commerce correctly when working with WebSite X5.


This article has information purposes only, and it doesn't intend to replace qualified legal or fiscal advice. For more precise information, please contact an expert in the field.



Overview of the new EU regulations about the VAT management

The new rules which entered into force on July 1st, 2021 are aimed at simplifying the cross-border selling process within the EU by introducing some regulations which specify when and which VAT rate should be charged.


Specifically, the new regulations about the VAT management in case of indirect B2C (Business to Consumer) e-commerce report that:

  • a unique threshold of €10,000 for all the  Member States is introduced, above which the activity is considered as relevant for the purposes of determining the VAT management, which will then align to the percentage established for the State of destination of the goods;
  •  the  simplified regime OSS (One Stop Shop) is introduced for the distance selling of goods.


It is necessary to specify that "indirect e-commerce" refers to the distance selling of  movable tangible goods to private persons. 


The introduction of a minimum threshold of €10,000 and the applicability to the selling among EU countries will result in the occurrence of difference cases, which we will be analyzing here.


Selling in your own country

In this case, nothing changes on a practical level.


If for instance you're in Italy and a customer who's also resident in Italy places an order, the normal Italian VAT will be applied.


Selling in another EU country with earnings worth less than €10,000

If during the current financial year and during the previous one (i.e. during the last two years) your distance selling towards another EU country was worth less than €10,000, you can consider that selling as if it came from your own country.


If for instance a German customer places an order on an online store pwned by an Italian company, the Italian 22% VAT will be applied, even if the German VAT rate is 19%. You will then need to pay the invoiced 22% VAT to the specific tax office as you usually do.


Selling in another EU country with earnings worth more than €10,000

Should your e-commerce generate B2C sales for more than €10,000 in another EU country, according to the new regulation you will need to apply the VAT rate the product would have in the customer's residence country.


Taking our previous example back, should a German customer place an order on an Italian online shop, the VAT rate won't be 22% anymore, but 19% instead. You will then need to report the sale to the tax office with the one-stop shop procedure (OSS).


#tip - On the European Union official website, you will find an overview of all the VAT rates in the different EU countries.


Selling in a non-EU country

Finally, and as far as the selling involving customers coming from countries which aren't part of the EU, the new regulation don't introduce any change. The possible VAT rate to apply then depends on the particular country regulation as well as on the kind of product sold. 


#tip - You can find some useful information in this VAT table, however, our suggestion is to always contact an expert.


How to apply this on the WebSite X5 e-commerce

With the update to version 2021.5, WebSite X5 complies with the newly introduced EU regulation about the VAT management and, with the Pro edition, it allows handling the VAT rate according to the country the order is being placed from.


#tip - To find out how to do that, please see How to set and manage the VAT on the store.