From 1 July 2021, the VAT rules on sales to private consumers in the EU will be extended so that VAT on sales of both goods and services to private consumers in the EU will be declared and paid in the member country in which the end user lives or the goods/services will be used. This means that businesses will have to declare and pay VAT in all the EU countries in which they sell goods and services to private consumers.

At the same time, the current schemes under the VAT Mini One Stop Shop will be extended to include an import scheme.

Originally, the new rules were intended to take effect from 1 January 2021, but due to the COVID-19 situation the EU countries have decided to postpone the date by six months from 1 January 2021 until 1 July 2021.

The most important changes:

  • From 1 July 2020, the legislation applies to both goods and services
  • From 1 July 2021, VAT will be charged on the the first krone on import from outside the EU
  • A common minimum for EU businesses’ settlement of VAT on sales to private consumers in the EU
  • Schemes will be introduced to make it easy to declare and pay VAT in one country (VAT One Stop Shop; the non-EU scheme, the EU scheme and the import scheme).
  • Businesses that have already signed up for VAT Mini One Stop Shop will automatically be part of the new VAT One Stop Shop scheme.

During 2020, new systems will be developped to register businesses in the new schemes and to declare information.

In 2015, the EU Commission passed new legislation to minimise the administrative burden on the corporate sector and to ensure fairer competition across the EU while at the same time reducing VAT fraud. As a result, businesses are now required by law to declare and pay VAT in all the EU countries in which they sell telecommunications, broadcasting and electronic services to private consumers.

A voluntary scheme, the VAT Mini One Stop Shop, was set up to make it easier for businesses to comply with the law. In Denmark, the shceme has been known as One Stop Moms/VAT Mini One Stop Shop. This scheme allows businesses to register, declare and pay EU VAT in one particular country. The advantage of the scheme is that a business does not have to declare VAT in all the EU countries in which it sells its products, but it can declare its VAT to its local tax authority (In Denmark, that would be the Danish Tax Agency (Skattestyrelsen)).

There are two versions of the One Stop Shop scheme: The EU scheme (for businesses in the EU) and the non-EU scheme (for businesses outside the EU). Further information on the two versions of the scheme.

From 1 July 2021, the law will be extended so that VAT on sales of both goods and services for private consumers in the EU has to be declared and paid in the member country where the end user lives or the goods/services will be used. This means that businesses will have to declare and pay VAT in all the EU countries in which they sell goods and services to private consumers.

Therefore, the VAT Mini One Stop Shop scheme will be extended to include all goods and services - typically from online shopping to consumers in the EU. In future, the scheme will be called its European name, VAT One Stop Shop (abbreviated OSS). The OSS scheme can still simplify the administration for EU businesses in relation to declaring and paying VAT on sales to private consumers.

VAT on the first krone on import from non-EU countries

The extension of the law also means that from 1 July 2021 businesses have to charge VAT on the entire import price for private consumers from non-EU countries. As a result, the lower limit for charging VAT will be abolished.

If you supply goods or services for less than EUR 10,000, you can declare the VAT in the country where the business is established

However, if your business sells goods or services for less than EUR 10,000 in a calendar year to private consumers in the EU, you do not have to declare and pay VAT in all the EU countries. You may simply declare and pay via the ordinary delcaration and payment system of your business. Howerver, you can still choose whether your business has to use the scheme. If so, your business has to be registered for the scheme and declare and pay VAT through the scheme.

The new rules and schemes take effect from 1 July 2021

From 1 April 2021, you can register your business for the new VAT One Stop Shop schemes (the non-EU scheme, the EU scheme and the import scheme), and from 1 July 2021 the new rules take effect. By doing it this way, businesses that are signed up for the schemes may start declaring and paying VAT to the country in which they have signed up from July 2021.

Until then, the current rules on VAT sales to private consumers in the EU apply. Also, the VAT Mini One Stop Shop shceme is available until 1 July 2021.

If your business is already signed up for the current VAT Mini One Stop Shop, you can read more about the implications of the new VAT One Stop Shop (OSS) scheme below.

Your business automatically becomes part of the OSS scheme

Your business will automatically be transferred to the new OSS scheme from July 2021. However, to check whether your business meets the OSS requirements, we will need further registration information on your business. We will contact you, when you will able to add this information.

Deregistration

If you want to deregister your business from the VAT Mini One Stop Shop scheme and not have your business transferred automatically to the new OSS scheme, you can read more about this at Deregistering your business from the MOSS scheme.

Correcting declarations prior to 2021

From 1 July 2021, you have to declare VAT on sales to private consumers in the EU via the new scheme that we are developping. If you have corrections to declaration periods prior to 2021, you have to make such corrections in the old scheme. This is why you will continue to have access to this scheme.