Up to now, VAT on supplies to non-entrepreneurs (i.e. mainly private customers) has been payable in the country where the customer is established (excluding vehicles). There was one important exception: VAT was payable in the supplier’s country if the value of goods supplied to a country was below a certain threshold (which varied from one EU country to another). This is the so-called mail-order rule.
VAT is due in the country of destination
The so-called distance selling regime now replaces this: 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of intra-Community distance selling of goods, the delivery thresholds, which differ from one country to another, are no longer applicable.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 remained 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 still needs to be reached. If, on the other hand, he delivers goods to Poland for 15,000 euros in a year, VAT is due there. The exceeding threshold value 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 destination country. He remains bound by this decision for two calendar years.