ViDA: First VAT Changes Take Effect 1 January 2027
ViDA: First VAT Changes Take Effect 1 January 2027
Although most measures included in the EU’s VAT in the Digital Age (ViDA) package will not take effect until 2028 and 2030, businesses should prepare for several important changes that will apply from 1 January 2027. These early measures will primarily affect businesses using the One Stop Shop (OSS) scheme, operating in e-commerce or through online platforms, or supplying electric vehicle charging services.
The OSS allows businesses to report and pay VAT due on business to consumer transactions in multiple EU member states through a single VAT return filed in one EU member state. Starting 1 January 2027, the moment of chargeability for OSS-reported transactions will be harmonized across the EU. VAT will become chargeable at the time the supply of goods or services takes place, replacing the current approach where chargeability depends on the rules of the member state where the transaction is subject to VAT. This change will eliminate differences between national rules throughout the EU. Businesses applying different chargeability dates today should assess whether this change will affect their administrative processes.
The scope of the OSS scheme will also expand. Certain transactions that currently trigger local VAT registration obligations may be reported through the OSS from 2027 onward. These include:
From 1 January 2027, legislation will clarify that this simplification cannot be applied where goods are supplied from stock located in another EU member state. For example, assume a Dutch business sells goods from stock located in the Netherlands to private consumers in Germany, generating annual turnover of EUR 7,000. The same business maintains also a stock of goods in Belgium and sells goods from that stock to private consumers in France, generating annual turnover of EUR 2,000. In this example, the French sales are taxable in France because the goods are supplied from Belgium. The simplification may still be applied to the German sales, which remain taxable in the Netherlands. However, if the business opts to report the French VAT through the OSS, it must also account for German VAT on the German sales through the OSS. In that case, the German supplies will no longer be taxable in the Netherlands.
Businesses holding inventory in multiple EU member states should assess whether the 2027 clarification changes where their cross-border sales are taxable and whether OSS reporting would simplify or alter their current compliance position.
Changes to the OSS Scheme
The following measures are among the first ViDA-related changes businesses should evaluate, even though the broader package will phase in later.The OSS allows businesses to report and pay VAT due on business to consumer transactions in multiple EU member states through a single VAT return filed in one EU member state. Starting 1 January 2027, the moment of chargeability for OSS-reported transactions will be harmonized across the EU. VAT will become chargeable at the time the supply of goods or services takes place, replacing the current approach where chargeability depends on the rules of the member state where the transaction is subject to VAT. This change will eliminate differences between national rules throughout the EU. Businesses applying different chargeability dates today should assess whether this change will affect their administrative processes.
The scope of the OSS scheme will also expand. Certain transactions that currently trigger local VAT registration obligations may be reported through the OSS from 2027 onward. These include:
- Services taxable in the EU but supplied to non-EU private individuals (e.g., a Swiss consumer engaging an Austrian real estate agent to purchase a holiday home in Austria); and
- Supplies of gas, electricity, heating and cooling to consumers.
Small Businesses and E-commerce
Businesses with limited turnover from supplies of goods and services to private consumers in other EU member states are not required to account for VAT in the customers’ member states. Instead, they may apply a simplification allowing them to report and pay VAT in their member state of establishment provided annual cross-border turnover from such supplies does not exceed EUR 10,000.From 1 January 2027, legislation will clarify that this simplification cannot be applied where goods are supplied from stock located in another EU member state. For example, assume a Dutch business sells goods from stock located in the Netherlands to private consumers in Germany, generating annual turnover of EUR 7,000. The same business maintains also a stock of goods in Belgium and sells goods from that stock to private consumers in France, generating annual turnover of EUR 2,000. In this example, the French sales are taxable in France because the goods are supplied from Belgium. The simplification may still be applied to the German sales, which remain taxable in the Netherlands. However, if the business opts to report the French VAT through the OSS, it must also account for German VAT on the German sales through the OSS. In that case, the German supplies will no longer be taxable in the Netherlands.
Businesses holding inventory in multiple EU member states should assess whether the 2027 clarification changes where their cross-border sales are taxable and whether OSS reporting would simplify or alter their current compliance position.
