The date of application of Council Regulation EU 2017/2454 is postponed

We would like to inform you that due to the unforeseen outbreak of the COVID-19 crisis and its significant impact on the Member States, the European Commission has decided to re-prioritize and reallocate resources for the implementation of the e-commerce VAT package in order to fight against the COVID-19 pandemic.

According to the Council Regulation EU 2017/2454 the following amendments should have entered into force from 1 January 2021:

·Special schemes were to be introduced for distance selling and other services, therefore, the rules were extended, according to which the registration Member State and consumption Member State will provide each other information and the registration Member State will transfer the money to consumption Member States.

·It would be determined, what kind of information regarding the application of special schemes should be provided by the taxable person and what kind of information should be exchanged between the Member States.

The above-mentioned special scheme will be used for electronically supplied goods. This special scheme will be available to any non-established taxable person, which carries out distance selling to non-taxable persons in other Member States, who will be able to choose the Member State of registration and will be given a separate VAT registration code. We would like to note, that before the date of entry of the above-mentioned Council Regulation, Companies which carries out the activity of distance selling  had to register for VAT purposes in every Member State to which the goods were supplied if they exceeded the national threshold, i.e. if the Company in Lithuania supplies goods which exceeds the threshold of EUR 35.000 then the Company must register for VAT purposes in Lithuania. According to the new Council Regulation, Company’s which perform distance selling will no longer have to register for VAT purposes in every Member State. Such Company’s will have to submit VAT returns in their Member States by indicating the amount of goods and/or services supplied to another Member States and will have to make the payment of calculated VAT to the bank account which will be specified by the Member State. In the meantime, the Member State will distribute the VAT received accordingly to the other Member States where goods and/or services were supplied.

The Council Regulation EU 2017/2454 should have been applied from 1 January 2021. However, the date of application has been postponed by the decision of European Commission to 1 July 2021.

If you have any additional questions, please do not hesitate to contact Leinonen Tax Team. Our team can provide VAT reporting, Intrastate reporting and other tax related services.

The above-mentioned information is prepared by Leinonen Tax Team.