VAT | 10. February 2020

EU-wide threshold replaces non-uniform delivery thresholds

To stay within the terminology of tax law: the mail-order business is gone. It will be replaced on 1.1.2021 by the distance selling regulation. by

Up to now, VAT on supplies to non-entrepreneurs (i.e. mainly private customers) has been payable in the country in which the customer is established (excluding vehicles). There was one important exception: if the value of goods supplied to a country is below a certain threshold (which varied from one EU country to another), VAT was payable in the country of the supplier. This is the so-called mail order rule.

VAT is due in the country of destination

This is now replaced by the so-called distance selling regime: in the case of intra-Community distance selling of goods, the delivery thresholds, which differ from one country to another, are no longer applicable. VAT is now generally due in the country of destination. A similar rule also applies to goods imported from outside the EU.

For deliveries within the EU, an EU-wide standardized threshold will apply instead of the delivery thresholds from 2021: If the total amount (excluding VAT) of the deliveries remains below 10,000 euros in the year and was also below 10,000 euros in the previous year, the deliveries will not be taxed in the country of destination but in the country in which the supplier is established.

Uniform threshold value of 10,000 euros

An example: If a supplier from Germany delivers goods to customers in Poland for 8,000 euros in a given calendar year, he pays VAT in Germany because the threshold value of 10,000 is not reached. If, on the other hand, he delivers goods to Poland for 15,000 euros in a year, VAT is due there. The fact that the threshold value is exceeded also means that the supplier must pay tax in the following calendar year on all goods delivered to private customers in other EU countries in the respective country of destination.

The supplier can also decide not to apply the delivery threshold of 10,000 euros and to pay tax in the country of destination. He remains bound by this decision for two calendar years.