Insights

VAT - NEW RULES FOR ELECTRONIC COMMERCE

20/05/2021 VAT

e-Commerce

On 1 July 2021, the new rules applicable to the provision of services and distance selling of goods (e-commerce) will come into force.

The amendments to the VAT Code and the VAT Regime for Intra-Community Transactions were introduced by Law 47/2020, of 24 August, which should have come into force on 1 January 2021. However, the pandemic forced the postponement of the application of the new rules in the European Union and, consequently, also in Portugal.

In this Article we outline the main changes and news:

-         New special VAT regimes

-         One Stop Shop (OSS)

-         New threshold for intra-Community distance sales of goods

-         New special regime for distance sales of imported goods

-         Sales through an Electronic Interface

-         New rules for distance selling

The new VAT rules applicable to e-commerce have the main objective of creating a competitive market, combating fraud and diversion of tax revenues, and reducing administrative costs by simplifying procedures. In fact, what has happened to date is that companies based in third countries are not obliged to charge VAT, so companies in the European Union are not in an equal competitive position.

On the other hand, the regime that has been in force entails a significant administrative burden in requiring taxable persons based in the European Union to register and declare VAT in the consumer's Member State.

The new rules imposed by the European Directives and transposed into our legal system, thus represent an important step for the Digital Single Market in Europe.

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