Intra-Community distance selling
Intra-Community distance sales are sales of goods whereby a company transports or sends the goods from one Member State to certain recipients, e.g. consumers, in another Member State. Intra-Community distance sales must generally be taxed in the Member State where the transport ends (Member State of destination). By way of derogation, intra-Community distance sales by micro-businesses are taxable in the Member State where the transport begins.
The selling of new means of transport as well as sales falling within the application of the margin scheme are excluded from the rules for Intra-Community distance sales.
As of 1 July 2021, there will be some major changes to the rules on intra-Community distance sales. For example, the hitherto threshold will be abolished, and intra-Community distance sales will instead be taxable in the country of destination in most cases. Moreover, the taxpayer has the option to register in only one EU Member State (Member State of identification) to the EU-OSS and declare and pay the VAT on intra-Community distance sales for all EU Member States via the EU One Stop Shop. The new rules will apply to sales transactions effected on or after 1 July 2021.
Recipients of distance sales
The rules on distance sales are only applicable to the supply of goods to the following categories of person:
- entrepreneurs who are not purchasing the item for their business
- "certain businesses" who do not exceed the purchase threshold and also do not waive application thereof
The last point above on "certain businesses" covers the following businesses:
- businesses that only effect tax exempt transactions which do not entitle the business to input VAT
- farmers eligible for flat-rate tax
- legal persons that are not entrepreneurs or are not purchasing the item for their business (e.g. chambers of commerce, local government authorities)
There is a simplified rule for micro-businesses, which stipulates that intra-Community distance sales must be taxed in the Member State in which the transport of the goods begins. For this rule to apply, the taxpayer must only be established in one EU Member State, i.e. the taxpayer cannot have fixed establishments in another EU Member State and must not exceed a threshold of Euro 10,000. The threshold consists of all intra-Community distance sales plus services within the meaning of Article 3a, paragraph 5, first sentence of the Umsatzsteuergesetz (UStG - Austrian VAT Act). The simplification for micro-businesses can be waived.
The provisions on the purchase threshold and the exemption for micro-business (as well as the distance selling threshold) do not apply to sales of excisable goods. When such goods are delivered to Austria from other Member States, they are always subject to Austrian VAT or result in acquisition tax being incurred by the threshold purchaser.
U has her business in Austria and does not have fixed establishments in other EU Member States. In 2021, U only supplies goods within Austria (i.e. she does not have any Intra-Community distance sales). From January to August 2022, the supplies of goods within Austria amount to 15,000 Euro. In the same period, U carries out supplies of goods to consumers in other Member States:
- supplies to Germany: 5,000 Euro
- supplies to France: 4,900 Euro
In addition to the intra-Community distance sales mentioned above, U carries out another intra-Community distance sale on 4 September 2022 and receives 200 Euro as consideration.
Solution for example 1:
In 2021, U carries out only supplies within Austria and therefore does not exceed the threshold for micro-businesses.
In 2022, U is treated as micro-business for sales carried out before she exceeds the 10,000 Euro threshold. If U does not opt out of the micro-business simplification, these intra-Community sales are taxable in Austria.
U exceeds the 10,000 Euro threshold with the sale (200 Euro) on 4 September 2022. She cannot use the simplification for micro-businesses for sales carried out as of that time and has to tax these supplies in the Member State where the transport ends. This treatment also already applies to the sale of the goods for 200 Euro in September. U can avoid a registration in France, by registering in Austria to the EU-OSS and declaring and paying the VAT through the EU-OSS.
In 2021, the Austrian distance seller V effects intra-Community distance sales amounting to 200,000 Euro. V sells goods in 2022 to a consumer in Germany, whereby he sends the goods via a delivery service from Austria to Germany.
Solution for example 2:
Since the 10,000 Euro threshold was exceeded in the preceding year, V cannot use the simplification for micro-businesses. The intra-Community distance sales effected in 2022 are therefore taxable in the Member State where the transport ends (see Art 3 Abs 3 UStG).
Until 30 June 2021, if a company supplies goods from one Member State to consumers or certain other recipients in another Member State, this transaction is only taxable in the destination country if the distance selling threshold for the destination country in question is exceeded. The place of delivery relevant for taxation purposes only changes when the distance selling threshold in the Member State where the delivery or shipment ends is exceeded. Calculation of the distance selling threshold must take place separately for each Member State. Consequently, in the case of intra-Community distance selling to Austria, it is the Austrian distance selling threshold that must be applied.
However, it is also possible to waive application of the distance selling threshold. In the case of distance sales from Austria to the rest of the Community territory, the Austrian tax office (→ BMF)German text must be notified in writing that the waiver is being applied. This waiver can be issued separately for each Member State. This shifts the place of delivery to the country of destination right from the first sale, irrespective of the number of transactions carried out.
The distance selling threshold does not apply to excisable goods.
Responsible for the content: Federal Ministry of Finance