The ultimate guide to the 2022 VAT changes in the EU

If you’re doing business in the European Union, it’s important to stay up-to-date on the latest changes to the VAT laws. It’s a different world in 2022.

In this article, we’ll take you through the current rules, what’s changed and how you and your business can prepare for the shifts that have already taken place with VAT in Europe.

What Is VAT?

VAT, or Value-Added Tax, is a type of tax that’s applied to the sale of goods and services. It’s calculated based on the increase in value of those goods and services from the time they’re produced until they’re consumed.

The rules around VAT can be a little confusing, but they’re important to understand if you’re an eCommerce seller. That’s because the VAT rates for different products and services can vary from country to country, and even within countries themselves.

In 2022, there were some big changes made to the VAT rules for eCommerce sellers. If you’re not familiar with them, it’s important to take some time to learn what they are now, so you can avoid any fines or penalties.

What is the difference between MOSS and OSS?

When it comes to the 2022 VAT changes in the EU, there are two acronyms that you need to be aware of: MOSS and OSS.

MOSS stands for Mini One Stop Shop, and it’s the system that online sellers have been using to collect and pay VAT since 2015. OSS stands for Online Service Solution, and it’s the new system that will be replacing MOSS from January 1, 2022.

The key difference between the two systems is that OSS is a self-assessment system. This means that online sellers will be responsible for calculating and paying their own VAT, rather than relying on their tax authority to do it for them.

What are the current VAT rates in the EU?

So what are the current VAT rates in the EU? That’s a good question. Here’s a breakdown of the current rates, according to the European Union:

Austria: 20%
Belgium: 21%
Bulgaria: 20%
Croatia: 25%
Cyprus: 19%
Czech Republic: 21%
Denmark: 25%
Estonia: 20%
Finland: 24%
France: 20%
Germany: 19%
Greece: 24%
Hungary: 27%
Ireland: 23%
Italy: 22%
Spain: 21%
Sweden: 25%

What are the changes to VAT in the EU?

So, what are the changes? To summarise, the key changes are:

– You will now be able to register for VAT in any EU country, rather than being restricted to your country of residence.

– The threshold for registering for VAT will be lowered from €35,000 to €10,000.

– The flat rate of VAT will be replaced with a system based on the type of product or service you’re selling.

– There will be new rules for cross-border transactions between EU countries.

These are just a few of the changes that are coming into effect in 2022. It’s important to understand them so that you can prepare your business for the shifts that have already taken place. And don’t worry, we’re here to help!

What does this mean for eCommerce sellers?

The 2022 VAT changes in the EU are definitely something you need to be aware of if you’re an ecommerce seller. There are a few key things that have changed, and if you’re not prepared for them, you could end up facing some hefty fines.

First of all, the threshold for when you need to start charging VAT has changed. It’s now at €10,000, whereas it was previously €35,000. So if you’re doing less than €10,000 in sales per year, you don’t need to worry about charging VAT.

But that’s not the only change. The rules around what’s considered a taxable supply have also changed. Basically, this means that more items are now considered taxable, and if you’re not charging VAT on them, you could be in trouble.

The good news is that there are ways to prepare for these changes. Prime Penguin can help you understand exactly what you need to do to make sure your business is compliant with the new VAT rules. So get in touch today to find out more!

What will change with the EU VAT Package?

The biggest change that’s coming in with the new VAT Package is that it will be mandatory for all businesses to register for VAT in every EU country where they have customers. Previously, this was only required if your business was making sales worth over €10,000 per year in a specific country.

But that’s not the only change that’s coming into effect on January 1st, 2022. Here are some of the other changes you can expect:

-Businesses will need to keep track of their sales in each EU country and submit quarterly reports

-VAT rates will be harmonized across all EU countries, meaning that the rate you pay will be the same no matter where you’re selling goods or services

-There will be a new system for managing cross-border VAT payments

Preparing for these changes is essential if you want to avoid any hefty fines from the tax authorities. So make sure you read through our guide and start putting plans into place now!

What are the consequences of not complying?

So, what are the consequences of not complying? Well, the penalties for not following the rules can be pretty severe. You could face a fine of up to €10 million or even imprisonment. And that’s just for individuals.

If you’re a business, the consequences are even more serious. You could face a fine of up to €500,000 or up to 10% of your annual global turnover. That’s a lot of money to lose, so it’s important to make sure you’re up to date with the latest changes and that your business is ready for them.

EU VAT? No problem!

The biggest change for the 2022 VAT is that it will now be known as the OSS (Operators Services Scheme). This change is being made to help simplify the entire process and make it easier for online sellers to understand and comply with the rules.

Another key change that has already taken place is that businesses now have to charge VAT at the destination country, rather than the origin. This means that you’ll need to keep track of the customer’s country of residence in order to charge them the correct amount of VAT.

There are a number of other changes that will be taking place in 2022, so it’s important that you keep up to date on what they are and how they may affect your business. Prime Penguin can help you do this, so make sure you get in touch if you have any questions.

You know the saying, “when it rains, it pours?” Well, that’s definitely been the case for business owners lately with all the new VAT regulations. But have no fear! Prime Penguin is here to help.

We can set up and maintain VAT in different systems, so you can focus on your business. We’re here to help, so please don’t hesitate to contact us. We’ll get you set up and keep you compliant with the latest VAT regulations.

Thank you for considering Prime Penguin as your go-to source for VAT help. We look forward to working with you!

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