Since 1 July, online shopping within the European Union (EU) has had a new legal framework which, among other things, provides for the end of the VAT exemption on online purchases from outside the EU up to €22, the extension of the VAT Single Window and the end of double taxation.
This legislative change is part of a wider set of changes that, in view of the significant growth in online sales during the Covid-19 pandemic, aim not only to ensure more effective and appropriate VAT taxation, but also to simplify the tax collection mechanisms for companies operating in a sector that, according to ACEPI (Digital Economy Association), had a global turnover of 8 billion euros in Portugal in 2020 in the B2C (business-to-customer) model alone.
After all, what has changed and, above all, what will be the impact of the new legislation on e-commerce in Portugal? That's what we're going to explain from now on.
What has changed in online shopping?
End of VAT exemption
As we mentioned, the main change brought about by the new legislation is the end of the VAT exemption on online purchases from outside the EU up to €22 in order to combat unfair competition from sellers from countries outside the EU, who incorrectly labelled shipments of goods in order to benefit from the VAT exemption.
By ending the VAT exemption for this type of transaction, the new legislation will end up putting businesses on an equal footing and protecting those based on European soil.
VAT One Stop Shop
Another change is the extension of the VAT Single Window. Unlike before 1 July, e-commerce platforms will no longer have to register with each member state to which they wish to export their products.
For example, if a e-commerce in Portugal If you want to sell products online to Germany, you will no longer be obliged to register in that country, and you can easily deal with all the declarations and VAT payments at this counter.
Elimination of double taxation
If an e-commerce company declares VAT under the special regime applicable to distance selling of imported goods and, at the time of customs clearance, indicate on the customs declaration for low-value consignments the supplier's individual identification number, assigned for the purpose of applying that regime, the new legislation provides for exemption from the payment of VAT and, consequently, the elimination of double taxation as was the case until now.
E-commerce platforms to be treated as "taxable persons"
Whether in Portugal or Romania, e-commerce platforms that sell goods are now considered "taxable persons" under new EU legislation. The aim of this measure is, according to the legislative document, "to ensure the effective collection of the tax due on the transactions carried out".
Likewise, these online business They are also obliged to keep "records of transactions carried out through them" and to "make this information available to the tax authorities".
Taxation at destination
In this area, the new rules state that:
- VAT on the sale of goods will now be charged in the Member State of destination for most e-commerce transactions;
- Small businesses established in a single member state that only make sporadic distance sales of goods are liable to pay tax in the member state where they have their headquarters (provided that the total amount of sales in the year exceeds 10,000 euros).
To these new rules must be added the end of the VAT exemption for low-value consignments and the creation of a special regime to simplify the fulfilment of VAT obligations in member states in which taxable persons are not established in the European Union, provided that they are not established in the European Union. online sales distance goods imported in consignments have an "intrinsic value of no more than 150 euros".
What impact will the new legislation have on online businesses?
In addition to the changes directly indicated by the defined rules, the new legislation will have an impact on the way in which online business operate and how much consumers will spend on their purchases. To wit:
Delayed deliveries
Due to the period of adaptation to the new rules and the foreseeable increase in the volume of parcels to be dispatched, some delays in parcel delivery are to be expected.
In Portugal, in order to comply with the new legislation and simplify procedures, simplified customs clearance has been maintained for products such as food, jewellery and precious metal artefacts and VAT can be paid at the time of purchase, with the seller paying the tax due to the Tax Authority for purchases of up to 150 euros.
This latest measure, aimed at sites or platforms with IOSS (Import One Stop Shop, IOSS), emphasises once again the importance of online payment methods that businesses put at the service of the customer.
Thinking of businesses that want to turning your website into a professional digital shop and receive e-commerce payments with simplicity and security, REDUNIQ offers Portuguese online businesses the solution REDUNIQ E-Commerce which, in addition to allowing the site to accept online payments with Visa and Mastercard debit and credit cards from all over the world, has no membership costs or monthly fees, is easily integrated with the main e-commerce existing, allows for better management of online sales made and also enables the integration of the solution Payment for Services which, in practice, will give businesses the chance to add online payment options to their catalogue. ATM references and MB WAY.
With the REDUNIQ E-commerce Receiving payments online with VAT included is simple. At the time of payment, the customer is directed to a Unicre payment page where they have to enter their card details so that the issuing bank can validate them. Once the payment has been validated, the money will be credited to the company's account in just two working days from the date of the transaction. It should be emphasised that, throughout the process, the company will never have access to the customer's bank details.
If the economic agent selling through social media and ask yourself how to receive online paymentsREDUNIQ provides the answer through the REDUNIQ @Payments which, without the need for an integration or a website, offers online businesses the means to pay by e-mail, SMS or WhatsApp with Visa and Mastercard cards.
Simple and safe @Payments provides a platform, optimised for smartphones and tablets, where the business creates a payment linkThis can be sent by e-mail, SMS or WhatsApp. When the customer receives the link, all they have to do is click on it and they will be redirected to a secure REDUNIQ page, thus ensuring that the company does not have access to the card details at any stage of the payment.
Leaving aside this comparison of online payment methods and its importance in receiving VAT payments from online consumers, when the seller guarantees payment of VAT and the transport service, CTT guarantees that the parcel will be cleared through customs without the intervention of the buyer or the payment of any additional amount.
If websites or e-commerce platforms do not allow VAT to be paid at the time of purchase, the tax will have to be paid on entry into national territory and the consumer can count on a notification to start customs clearance on the Customs Clearance Portal, having to pay the VAT and CTT Service directly on the portal. In this case, the fee charged is 2 euros, but if the order is worth more than 150 euros, the fee rises to 4 euros.
More spending for consumers, more equality for business
With the end of the VAT exemption for non-EU purchases, the consumer will pay the corresponding rate in Portugal (23%). This means that if you buy a dress for 20 euros on a Chinese e-commerce platform you will now have an extra 4.60 euros added to the final price.
On top of this, there is the service charge for collecting the tax and for customs clearance, which in the case of the CTT Service is no more than 2 euros.
However, this inflation in the final price will ultimately benefit Portuguese online businesses, which will be able to face bigger players on a more equal footing, which will ultimately have an impact on their turnover.
Less risk of tax evasion and greater transparency
With the fight against tax fraud, the increase in revenue collected by states and the greater competitiveness of e-commerce in the crosshairs, the EU's new rules for e-commerce will ensure that all online businesses pay the taxes due, as companies from outside the EU were previously able to avoid paying VAT and had no reporting obligations within the Union.
We talked in the previous point about the higher costs for those buying online from companies outside the EU, but this will go hand in hand with greater transparency, which ultimately favours the customer because in practice, surprise charges and customs costs on imported goods disappear, bringing greater transparency to the whole process.
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