EU-wide changes to VAT regulations concerning online shopping will not harm Cypriot consumers, the House finance committee on Monday concluded during a meeting with finance ministry representatives.
The new rules dictate that consumers will pay the VAT corresponding to their country when making online purchases.
The committee was discussing the bills it forwarded to parliament in September to adjust the relevant legislation, as the European Commission set the deadline for the changes to come into effect on July 1, 2021.
A finance ministry representative said that the European Commission deemed it necessary to adjust VAT rules, which were last modified in 1993, to keep pace with the boom in online shopping caused by the pandemic.
According to the European Commission, changes were made “to ensure a more level playing field for all businesses, to simplify cross-border e-commerce and to introduce greater transparency for EU shoppers when it comes to pricing and consumer choice”.
For example, when a Cypriot consumer buys a pair of shoes from Greece, the Greek supplier must from July 1 impose the VAT applicable to this good in Cyprus, (19 per cent). If the purchase was made before July 1, then a 24 per cent VAT would be imposed, which is valid in Greece.
For purchases from third countries, tax exemption for purchases up to €150 euros has been abolished. For larger purchases, import duties will still apply.
At the same time, both EU sellers and non-EU importers will be able to register and pay for VAT through an online portal called the ‘One Stop Shop’ which will take away the need to register for VAT to individual countries.
The tax department concluded that the above changes are not expected to have a negative impact on Cypriot consumers, since they will simply pay Cypriot VAT for online purchases.