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The VAT threshold for micro-enterprise in the EU

By / In EU VAT / 5 Min read

Changes to the European Union (EU) VAT rules were introduced in 2019. There is a registration threshold of 10,000 Euro for supplies of digital services. Based on the new rule, companies have to pay the tax to the consumer’s home nation, if its annual sales in the EU in the previous year reach 10,000 Euro.

Russia conducted VAT for B2B digital sales

From January 1, 2019, the new tax rules were effective in Russia. Not only digital B2C sales, but companies that sell goods via the internet to Russian corporations are obligated to pay the VAT to Russian authorities. The rate of taxations rose by 2%, from 18% ​to 20%. Foreign companies are liable to register for each transaction despite its scale.

New rules for marketplaces

Online marketplaces have a tax liability for missing VAT in the UK and Germany. It is better for distance traders to adapt their business processes to ensure their compliance in each country or region. Distance traders should confirm their registration as soon as possible. It is questionable whether marketplaces will require an original confirmation from their traders. Therefore, if possible, distance sellers should request a separate confirmation for each marketplace they operate in. Online marketplaces will become liable to charge and collect the VAT​.​ The new rule will be taking effect across the EU in 2021.

Cross-border selling​ ​regulation in Switzerland

Changes to the European Union (EU) VAT rules were introduced in 2019. There is a registration threshold of 10,000 Euro for supplies of digital services. Based on the new rule, companies have to pay the tax to the consumer’s home nation, if its annual sales in the EU in the previous year reach 10,000 Euro.

 

Russia conducts VAT for B2B digital sales

From January 1, 2019, the new tax rules were effective in Russia. Not only digital B2C sales, but companies that sell goods via the internet to Russian corporations are obligated to pay the VAT to Russian authorities. The rate of taxations rose by 2%, from 18% ​to 20%. Foreign companies are liable to register for each transaction despite its scale.

 

New rules for marketplaces

Online marketplaces have a tax liability for missing VAT in the UK and Germany. It is better for distance traders to adapt their business processes to ensure their compliance in each country or region. Distance traders should confirm their registration as soon as possible. It is questionable whether marketplaces will require an original confirmation from their traders. Therefore, if possible, distance sellers should request a separate confirmation for each marketplace they operate in. Online marketplaces will become liable to charge and collect the VAT​.​ The new rule will be taking effect across the EU in 2021.

 

Cross-border selling​ ​regulation in Switzerland

From 2019, there are significant changes to the VAT regime for distance sales. For instance, if a company’s annual turnover in 2018 exceeds or the expected annual turnover in 2019 surpasses 100,000 CHF, the company has the obligation of paying tax.