In short: Since 1 July 2021 there has been a single EU-wide threshold of €10,000 a year for distance sales to consumers in other Member States. Above it, you charge the VAT of the customer's country. You can declare and pay it all with a single quarterly return under the OSS scheme.
An Italian shop selling to a customer in France or Germany needs to know which VAT applies to the sale. On 1 July 2021 the European rules changed. A single threshold of €10,000 was introduced, together with a one-stop shop for declaring the VAT of every country in one place. The legal basis is Council Directive (EU) 2017/2455, transposed in Italy by Legislative Decree 83/2021.
This is a general guide and not tax advice: VAT has many exceptions and should be set up with your accountant.
The starting rule
When you sell goods to consumers in another EU country and ship them yourself or have them shipped, VAT is normally due in the country of destination. With one exception: the €10,000 threshold.
The €10,000 threshold
- It applies to the total of your distance sales of goods to consumers in other Member States plus telecommunications, broadcasting and electronically supplied services. It is not a threshold per country.
- It is calculated excluding VAT.
- It applies as long as you have not exceeded it in the current year or in the previous one.
- If you exceed it during the year, the VAT of the destination country applies from that moment on.
- Below the threshold you can still choose to charge the VAT of the destination countries. That choice binds you for a minimum period.
The one-stop shop: OSS
Above the threshold you would have to register for VAT in every country you sell to. The OSS (One Stop Shop) scheme spares you that:
- You register once on the portal of your own Member State (in Italy, the Agenzia delle Entrate, the Italian Revenue Agency).
- You charge customers the VAT rate of the destination country.
- You file one quarterly return electronically, listing your sales by country.
- You pay the VAT owed to the various countries in a single payment.
The scheme covers intra-EU distance sales of goods and services to consumers. VAT on domestic sales stays outside it and follows the usual rules.
What about goods coming from outside the EU?
For consignments shipped from outside the EU of goods with an intrinsic value of no more than €150 there is a similar scheme, the IOSS (Import One Stop Shop). If you import this way, talk to a customs specialist.
What your online shop needs
- VAT rates by country set up on the platform and shown in the basket.
- VAT-inclusive prices for consumers, with the breakdown on the receipt.
- A record of sales by country from which to pull the figures for the OSS return every quarter.
- A link to your management software: invoices must show the right rate.
- Handling of EU VAT numbers for business customers, checked through VIES: B2B sales follow different rules.
Before you start
- Work out how much you currently sell to consumers in other EU countries.
- Ask your accountant whether you exceed the threshold or whether it makes sense to charge destination VAT anyway.
- Register for the OSS before you sell above the threshold.
- Set up rates and records in your shop.
- Check the invoices for the first orders.
Further reading: connecting your online shop and management software · Shopify or WooCommerce
Frequently asked questions
What is the threshold for sales to consumers in other EU countries?
€10,000 a year, excluding VAT, across all intra-EU distance sales of goods and telecommunications, broadcasting and electronically supplied services to consumers in other Member States. It applies if it was not exceeded in either the current year or the previous one.
What happens when I exceed the threshold?
From that moment on, your sales are subject to the VAT of the Member State of destination, at that country's rates. You can avoid registering in every country by using the OSS scheme.
What is the OSS?
The One Stop Shop: a single registration in your own Member State through which you declare and pay the VAT owed in other EU countries with one quarterly electronic return.
Who should I consult about my situation?
Your accountant. VAT has many exceptions (products, special schemes, sales through marketplaces) and this guide does not cover them.