VAT for products sold over the internet will be paid in the country of destination

VAT for products sold over the internet will be paid in the country of destination

The new European regulation will come into force in 2021 and will harmonize the tax obligations of companies that operate in the network

    As of January 1, 2021 the European VAT directive will change, which will mean a "small revolution" over the next three years in terms of this tax to "harmonize", for example, aspects of electronic commerce of goods and services in intra-community operations. The most important change will be that the VAT of the sales of products purchased through the internet will be paid in the country of origin to be taxed in the destination of the goods.

  During his presentation at the Madrid VAT Forum , the director of the Research Center and coordinator of indirect taxes of AEDAF, David Gómez, explained that the regulations will "gradually" come into force in the period 2019-2021 and entail the start-up of some rules that will harmonize the tax obligations of companies that operate on the internet.

"The regulations will affect e-commerce operators that sell their products in different countries of the European Union, as well as digital platforms that facilitate such sales, " he said. On the change of taxation to the country of destination of the goods, Gomez explained that currently sales are taxed at source, which carries the risk of generalized internet sales from countries with lower tax rates and the displacement of demand .

To avoid this, the EU has created a system in which the company must pass on to its customer the VAT of the country of destination, which can in turn affect the margins of the commercial transaction.

In addition, a single one-stop system will be created in which all online sales can be declared at the community level. The threshold will be 10,000 euros , below which the deliveries of products will be taxed in the country of departure, but if it exceeds the seller will enter all the VAT in your country through this system of single window declaring the applicable rates in destination.