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EU’S NEW 2021 VAT CHANGES AND YOUR DROPSHIPPING BUSINESS: WHAT YOU NEED TO KNOW

EU’S NEW 2021 VAT CHANGES AND YOUR DROPSHIPPING BUSINESS: WHAT YOU NEED TO KNOW
The European Commission has published a Directive (EU) 2016/1146 of 6 December 2016 amending Council Directives 2006/112 and 2008/934 as regards exemptions from value added tax for certain supplies with respect to distance contracts concluded by electronic means or involving cross-border trade in goods. This will take effect on July 1st 2021 - so all your questions can finally be answered

Some EU dropshippers have been waiting to see how new changes to VAT would affect their business, but the good news is they don’t need to wait any longer.

The European Commission has published a Directive (EU) 2016/1146 of 6 December 2016 amending Council Directives 2006/112 and 2008/934 as regards exemptions from value added tax for certain supplies with respect to distance contracts concluded by electronic means or involving cross-border trade in goods. This will take effect on July 1st 2021 – so all your questions can finally be answered!

Don’t wait for the other guy, call your own shots and hire yourself.

If you’re making more than €10K per year or if your company sells products to buyers outside of Italy then it’s time to start paying VAT on all border sales as well as remitting any due taxes with each sale.

And don’t worry, we’ve got a few great tips up our sleeve that will make tackling these new responsibilities easy-breezy!

For example, the threshold was €100 in Germany and $35,000 in Spain; if you dropshipped to customers on these countries respectively, VAT would be your responsibility for earnings below those thresholds (provided they weren’t exceeded).

Now with new tax laws that have recently been introduced across Europe as a whole, not just individual countries like before.

All sellers of goods are now required to pay import taxes regardless of what amount or type their products fall under so long as it falls within the range between €22-€150 excluding any items classified at luxury price points. The European Union has introduced the Import One Stop Shop (IOSS) to provide a streamlined process for sellers and dropshippers when importing goods into their home country.

Through this tool, sellers can declare VAT and remit it in one single location instead of having buyers pay VAT costs through customs.

This is an excellent way for small businesses who sell smaller amounts across many countries within the EU to keep up with all those tax obligations!

Under the upcoming VAT rules, there’s an exemption for small merchants established in one of the EU Member States with sales less than €10,000

This is a relief to micro-businesses that have been struggling since this decision was announced last year. Now you can pay VAT from all your European Union country sales through a single tax authority and choose what state it will be applicable to! Woohoo!!

In order to continue charging the local VAT rate in Europe, European business owners must register for one of two systems:

One Stop Shop or Import One Stop Shop. This is done by filling out a form with their details and registering on an online system that can be accessed anywhere which will help ensure they are charged at the correct rates.

If you don’t use IOSS, your shipments may be more likely to get stopped at the border and delayed.

If you’re using an online marketplace like Amazon or Ebay for transactions, things are different: under new law they might not charge VAT on purchases from other EU countries when their company is deemed as the vendor of goods – so it doesn’t apply in that case!

As a business owner, we understand that taxes can be very confusing.

If you are unsure of where you fit into the new VAT laws, it would be worthwhile to hire consultants or lawyers who will examine your specific needs and advise on steps forward for both now and in the future.

They might even help find solutions that one may not have discovered by themselves

Like the number of changes that occurred with the recent change in VAT in the UK from 17.5% to 20%. It is likely that further details regarding this change will not be made clear until July 1, which could make life difficult if someone only realizes their mistake at an inopportune time (depending on what country).

Before we get into the new 2021 VAT changes, let’s do a quick recap on what it is.

The Value Added Tax (VAT) was introduced in 1973 as an attempt to harmonize taxes within Europe and combat fraud with a standardized tax structure across all member states of the European Union.

It’s important that you are aware of any misinformation being spread about this change

Because if your company isn’t paying its fair share, then it will have real consequences for everyone else!

The EU has clarified that those using digital services or business models such as subscriptions will not be affected by these changes

Which means that companies need to adapt their accounting methods accordingly more than ever.

The value-added tax (VAT) is a consumption tax on goods and services.

It’s a flat rate that applies to anyone who purchases something, as opposed to other forms of taxes such as income taxes which are based on earnings.

More than 160 countries levy VAT rates for their citizens

With the majority being in Europe Union nations like France or Italy where it’s most common.

However recently each country has its own individual VAT rate instituted by the European Commission due to new policies they have adopted regarding this system of taxation.

The change was made so there will be more uniformity when it comes down implementing how much people pay within EU borders depending upon what product they purchase – whether food or clothes – because sometimes one country may charge lower amounts.

The EU has a complicated VAT system, which will soon be changed.

When Brexit finally occurs in 2021 and the UK leaves the Union, one of their primary benefactors – Europe’s 27 countries with different tariffs and regulations that they have to take into account when selling goods across state lines- is going away.

This change was pushed by France’s president Emmanuel Macron

Who had concerns about his country losing control over its economic future as well as not expanding business opportunities without Britain present on either side of things. Yet this might lead some people to think there are benefits for citizens living within these European nations themselves!

The current plan could make it easier for businesses on both sides.

Because post-Brexit economies won’t need two sets of taxes or customs.

For many small business owners with dropshipping, the new 2021 VAT changes in Europe will mean you’ll have to change some (or even all) aspects of your current way of doing things.

Whether it’s raising your prices or opting out from selling certain products altogether for EU customers, you’ll need to plan accordingly because this can be a little overwhelming at times and there are plenty experts who can help make sure that these moves are beneficial for long-term success.