Cross-border supplies of goods between the EU and the United Kingdom and VAT refunds from 01.01.2021

As of the end of the transition period (31 December 2020), the EU rules in the field of VAT, and in particular Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State, no longer apply to and in the United Kingdom. This has in particular the following consequences concerning the treatment of taxable transactions of goods and VAT refunds:

I. VAT RULES FOR CROSS-BORDER SUPPLIES OF GOODS

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Taxation through the Amazon platform

We will look at the specifics of taxation when declaring services provided through a platform such as Amazon under the VAT Act. Imagine that we have a Bulgarian company that operates online trading through a platform such as Amazon and other similar online trading platforms.

The current trend for such cooperation is to take place through the so-called “dropshipping” model. The dropshipping business is a way to trade in goods that have not been purchased in advance by the manufacturer. The dropshipping trader advertises the product and when it is sold online, the trader buys it from the manufacturer and sends it to the customer.

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