The VAT reform from July 1, 2021 is putting a strain on European commerce and far-reaching adjustments will be required. Shop system operators in particular had to act quickly and adjust their databases accordingly. We would like to explain here the new long-distance purchasing regulation and the new One-Stop-Shop (OSS) procedure within the German Market plugin under WooCommerce.
In our explanation of the new long-distance transport purchase regulation and the new OSS procedure , we mainly deal with the following points:
The sales tax reform has a not insignificant impact on online shop operators who sell in other EU member states. Until now, VAT was only charged domestically if you delivered to a non-entrepreneur. However, if the individual delivery threshold of an EU country was exceeded, the VAT in the respective country had to be calculated. To date, each country had an individual delivery threshold. An EU-wide delivery threshold of €10,000 net has been in effect since July 1st, 2021. If this delivery threshold is exceeded, VAT is due in the respective destination country. If this is the case, the shop operator is most likely taking part in the one-stop shop process and adjustments to the shop system, here WooCommerce as an example, are necessary. We will inform you about the plugin German Market for WooCommerce in the following article.
Importing the tax rates for all EU countries can be implemented very quickly using the German Market plugin and the add-on “EU VAT”. Additional tax classes can thus be added to the standard tax classes with relatively little effort. Nevertheless, one should always check whether the tax rates in the corresponding delivery country are applied correctly, this can also be done quickly using WooCommerce home remedies. Special cases such as products with reduced tax rates must be provided with additional tax classes.
If different tax rates are calculated for different EU countries, the price of a product can change during the ordering process if a different delivery country is selected.
An example: A product is sold for 200 euros incl. 19% (DE) VAT. This price is also displayed on the product page. If Austria is selected as the delivery country on the checkout page, for example, a tax rate of 20% will be applied. WooCommerce then changes the price in such a way that it deducts the tax of the shop base country from the set gross price (in this case the 19% (DE) VAT) and then adds 20% (AUT) taxes for Austria. This would result in a gross price of 200.91 euros (200 euros / 219 x 220).
The gross price would therefore change. Based on the Price Indication Ordinance, the price displayed in the shop system must be the total price including VAT, which must therefore no longer change during the ordering process.
Even if conclusions can already be drawn from the country settings of a browser from which country an order is made, the actual tax rate can only be specified at checkout based on the selection of the delivery country. A reference to the tax rate is not mandatory, but is often desired by customers. However, it is mandatory to indicate that the gross price includes VAT. In WooCommerce, this can be realized using the generalized tax output.
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