Tax Observatory › European taxation › EU e-commerce: how the EUR 10,000 place-of-supply threshold changes in 2027

EU e-commerce: how the EUR 10,000 place-of-supply threshold changes in 2027

From 1 January 2027, the EU’s EUR 10,000 threshold for distance sales will neither increase nor disappear: its scope will be clarified. Only sales of goods dispatched from the Member State in which the supplier is established will count towards it. Sales from stock held in another Member State will be excluded from the calculation and will follow destination taxation. The reform will also extend the deemed-supplier rule for marketplaces.

The rules are contained in Article 2 of Council Directive (EU) 2025/516. Member States must transpose them by 31 December 2026 and apply them from 1 January 2027. On 24 July 2026, the Commission updated its Explanatory Notes and OSS Guidelines.

In Italy, transposition is not yet complete. The Department of Finance of the Ministry of Economy and Finance placed the draft legislative decree out for public consultation from 22 June to 6 July 2026, and the Council of Ministers gave it preliminary approval on 4 August 2026. As at the date on which this article was updated it is awaiting the opinion of the parliamentary committees, and publication of the final text has not been observed. The guidance below therefore rests on the EU text: the wording of the domestic rules should be checked once the decree is final.

One EU-wide threshold, also covering TBE services

The EUR 10,000 threshold, exclusive of VAT, is annual and applies across the Union. The relevant total must not exceed EUR 10,000 in either the current or the preceding calendar year. For each year, it combines cross-border telecommunications, broadcasting and electronic (TBE) services with intra-Community distance sales of goods dispatched from the Member State in which the supplier is established, without separate thresholds for each Member State of destination.

The threshold applies only where the supplier is established in a single Member State. It does not apply to a supplier established outside the Union, a supplier with a fixed establishment in another Member State, or services other than TBE services; distance sales of goods imported from third territories or third countries also fall outside Article 59c, whether or not IOSS is used. Once the relevant total exceeds EUR 10,000, VAT is due in the consumer’s Member State, or the Member State where the goods arrive, from the transaction that causes the threshold to be exceeded. The supplier must then use local registrations or the Union OSS.

In Italian law the threshold and the option are set out in Article 41(1)(b) of Decree-Law 331 of 30 August 1993. The EUR 10,000 limit is measured against the preceding calendar year and, where it is exceeded during the year, taxation at destination applies from the transaction that causes it to be exceeded. The option for taxation in the Member State of destination is notified in the annual VAT return and remains effective until revoked, and in any event for at least two years. A related situation must be kept separate, because no threshold applies to it at all. Services supplied to non-taxable persons for virtual attendance at cultural, artistic, sporting, scientific, educational, entertainment or similar activities have been taxable in the customer’s Member State since 1 January 2025, whatever the amount involved, even though they may be reported through the OSS. Webinars and live courses are the typical case.

The domestic provisions referred to here are, however, those in force at the date on which this article was updated, and their days are numbered. The consolidated Italian VAT code, enacted by Legislative Decree 10 of 19 January 2026, applies from 1 January 2027 and, from that same date, repeals Articles 37 to 52 of Decree-Law 331/1993 (Articles 170 and 171 of the code). The threshold, the option, transfers of a business’s own goods to another Member State and non-taxable intra-EU acquisitions will therefore be found in the consolidated code, and the decree transposing Directive (EU) 2025/516 will have to be read together with it: the correspondence between the old and the new articles should be checked against the code before it is carried into internal documentation.

A supplier may opt for destination taxation even below the threshold. From 2027, registration for the Union OSS will constitute exercise of that option, which is binding for two calendar years. A business cannot therefore use OSS for only part of the transactions concerned while continuing to charge domestic VAT on the rest.

What applies in 2026, and why it matters

Until 31 December 2026, Article 59c(1)(b) requires only that the goods be dispatched or transported to a Member State other than the one in which the supplier is established, without stating the Member State from which dispatch must begin. On a literal reading, therefore, sales dispatched from a warehouse abroad do count towards the threshold in 2026.

The point is not academic, because the test for 2027 also looks at the preceding calendar year, that is 2026. Recital 36 of the Directive presents the measure as a clarification of existing rules, and that description lends support to applying the new scope to the 2026 figure as well. Formally, however, the provision is an amendment taking effect on 1 January 2027: a supplier applying the text in force in 2026 will also count sales dispatched from stock held abroad. For businesses close to the threshold the two readings lead to divergent outcomes.

In the absence of an express position from the Italian authorities, the prudent course is to compute the 2026 figure on both bases, to keep the sales record broken down by Member State of dispatch, and to record the criterion adopted in writing. If the two computations agree, the question does not arise; if they diverge, the reasons for the choice must be recorded before the threshold is exceeded, not afterwards.

Stock held abroad is excluded from the calculation

The most practical clarification concerns multi-warehouse logistics. From 2027, Article 59c will expressly provide that only sales of goods dispatched from the supplier’s Member State of establishment count towards the threshold. If an Italian business stores goods in Germany and dispatches them from there to French consumers, those sales will not increase the Italian EUR 10,000 total.

Exclusion from the calculation does not make German VAT applicable to the sale. It remains taxable in the Member State in which transport ends — France in the example. The threshold determines only whether supplies of goods dispatched from the supplier’s sole Member State of establishment may remain taxable at origin.

Assume that the relevant total did not exceed EUR 10,000 in the preceding year and that there are no additional TBE services in the current year. An undertaking established only in Italy sells EUR 8,000 of goods dispatched from Italy to EU consumers and EUR 20,000 of goods dispatched from a German warehouse to customers in France and Austria. Only the EUR 8,000 counts towards the threshold. The sales from Germany to France and Austria may be reported through the Union OSS in Italy. Under the rules applicable until 30 June 2028, however, transferring the undertaking’s own goods from Italy to the German warehouse requires VAT identification in Germany in respect of the deemed intra-Community acquisition and the related compliance obligations. The German VAT number must be included in the Union OSS registration details. Holding stock does not, in itself, create a fixed establishment for VAT purposes. Article 11 of Implementing Regulation (EU) No 282/2011 requires a sufficient degree of permanence and a suitable structure in terms of human and technical resources. The Court of Justice has set out the scope of that test in Titanium (C-931/19), Berlin Chemie (C-333/20) and Cabot Plastics (C-232/22). If the warehouse did amount to a fixed establishment, the condition in Article 59c(1)(a) would no longer be met and the EUR 8,000 in the example would also be taxable at destination.

Two points on the Italian side of the example. The transfer of the goods from Italy to the German warehouse is a deemed intra-Community supply under Article 41(2)(c) of Decree-Law 331/1993, with the related invoicing and recapitulative statement obligations. Sales made from the German warehouse to consumers resident in Germany, by contrast, are not intra-Community distance sales: they are domestic supplies in the Member State of dispatch and, until 30 June 2028, cannot be reported through the Union OSS but must be accounted for under the German VAT registration.

Marketplaces: the deemed-supplier rule covers a wider group of customers

In certain transactions, Article 14a of the VAT Directive deems the taxable person who facilitates the supply through the use of an electronic interface to have received and supplied those goods himself (the deemed-supplier rule). From 1 January 2027, the rule will expressly also cover supplies of goods within the Community made by a taxable person not established within the Community to taxable persons or non-taxable legal persons whose intra-Community acquisitions are not subject to VAT under Article 3(1) of the VAT Directive, as well as to any other non-taxable person. The reference is not to a list of categories but to a condition: it captures non-taxable legal persons, taxable persons subject to the common flat-rate scheme for farmers and taxable persons who carry out only supplies of goods or services in respect of which VAT is not deductible, including, on those terms, small enterprises covered by the exemption scheme for small enterprises. It also captures the cases referred to in point (a) of the same paragraph, namely acquisitions the supply of which within the territory of the Member State would be exempt pursuant to Articles 148 and 151 of the Directive. The domestic provision that corresponds to that Article 3(1) — and not to the deemed-supplier rule — is Article 38(5)(c) of Decree-Law 331/1993: it sets the domestic threshold at EUR 10,000 and allows the person concerned to opt for taxation.

The extension applies to those customers only for so long as their relevant intra-Community acquisitions — excluding new means of transport and products subject to excise duty — remain below the national threshold, which cannot be lower than EUR 10,000, and they have not opted for taxation. The treatment changes from the acquisition that causes the threshold to be exceeded. For covered transactions, the sale is split into a supply from the underlying seller to the platform and a supply from the platform to the customer. The marketplace must establish the customer’s status and monitor the threshold and any option, taking account of the presumptions in Implementing Regulation (EU) No 282/2011.

Also from 2027, and also under Article 2 of the Directive, it is clarified that the non-Union scheme covers all services supplied to non-taxable persons within the Community by taxable persons not established within the Community. Supplies of gas, electricity and heat or cooling energy falling within the conditions in Article 39 will be treated as intra-Community distance sales of goods, for the sole purpose of access to the Union scheme, until 30 June 2028. These changes concern businesses other than those addressed here, but they should be borne in mind by businesses operating on several fronts.

What businesses should change in their processes

Businesses must distinguish the Member State of establishment, the dispatch location, the Member State of arrival and the customer’s VAT status. Aggregating all EU sales without distinguishing them by the Member State from which the goods are dispatched may distort the threshold calculation; ignoring sales from foreign warehouses may lead to VAT being charged in the wrong country.

Orders, transport documents, platform reports and OSS returns should be reconciled monthly. The rules on corrections do not change in 2027. For periods from the third return period of 2021 onwards, changes to figures in a return already filed are made only in a subsequent return, to be submitted within three years of the deadline for the original return. That is the rule in Article 61 of Implementing Regulation (EU) No 282/2011, which is already in force. Only from 1 July 2028, by virtue of Article 3 of Directive (EU) 2025/516 and Article 2 of Implementing Regulation (EU) 2025/518, will corrections made before the filing deadline be included in the return itself, and any correction made in a subsequent return will have to identify the Member State of consumption, the tax period and the amount. As regards entry into the scheme, the ordinary rule is that the OSS applies from the first day of the calendar quarter following notification. Where the first supply precedes that day, the scheme covers it only if the start of activity is notified by the tenth day of the month following that first supply — Article 57d of Implementing Regulation (EU) No 282/2011. If those deadlines are missed, any supplies not covered by the scheme must be accounted for under a local VAT registration in the Member State of consumption. For a wider overview, see our practical VAT guide and the Tax Observatory.

In practice

By the end of 2026 each task should be assigned to the person able to complete it: the mapping of business-to-consumer warehouses and dispatch flows to the logistics contact; the separation of the relevant transactions in the accounting system to the software provider, working with the finance function; the review of contracts with marketplaces and logistics operators to the person who signed them; and the computation of the 2026 threshold on both bases to the VAT adviser. It should be borne in mind that, from 2027 and for transactions covered by Article 59c, registration for the Union OSS constitutes exercise of the option for taxation at destination.

Decisions alone are not enough; they must be documented: updated warehouse and customer master data in the accounting system, updated OSS registration details including foreign VAT identification numbers, and an internal note recording the criterion adopted for the 2026 computation and the date on which it was adopted.

What counts in the event of an audit is the evidence: platform reports, transport documents and proof of delivery, a sales record broken down by Member State of dispatch and of arrival, identification of the transaction that caused the threshold to be exceeded and of the date on which that occurred, and OSS return submission receipts. Where stock is held in several Member States, the Member State from which each item is dispatched also matters: without that field in the record, the computation cannot be reconstructed after the event.

Frequently asked questions

Will the place-of-supply threshold rise above EUR 10,000 in 2027?

No. The amount remains EUR 10,000, exclusive of VAT, and the relevant total must not exceed it in either the current or preceding year. Intra-Community distance sales of goods dispatched from the supplier’s Member State of establishment, together with cross-border TBE services, are included.

Are sales from a foreign warehouse exempt below the threshold?

No. From 2027 they are excluded from the calculation, but they remain taxable under the ordinary rule in the Member State of arrival. For 2026 the scope is uncertain: see the section above. Exclusion from the threshold does not remove VAT obligations connected with foreign stock.

Can I use OSS and still charge Italian VAT below the threshold?

Registration for the Union OSS constitutes an option for destination taxation for transactions covered by the scheme. The option is binding for two calendar years and must be applied consistently.

Sources

Council Directive (EU) 2025/516 of 11 March 2025 (OJ L, 2025/516, 25 March 2025), recital 36 and Articles 2, 3 and 6; Directive 2006/112/EC, Articles 3, 14a, 39, 54, 59c, 148 and 151 in their consolidated versions; Implementing Regulation (EU) No 282/2011, Articles 11, 57d and 61 in their consolidated versions; Council Implementing Regulation (EU) 2025/518 of 11 March 2025, Article 2; European Commission, Explanatory Notes and OSS Guidelines updated on 24 July 2026; Court of Justice of the European Union, Titanium (C-931/19), Berlin Chemie (C-333/20) and Cabot Plastics (C-232/22); Decree-Law 331 of 30 August 1993, Articles 38(5) and 41; Legislative Decree 10 of 19 January 2026 (consolidated Italian VAT code), Articles 170 and 171; Department of Finance, draft legislative decree transposing the Directive, open for public consultation from 22 June to 6 July 2026 and given preliminary approval by the Council of Ministers on 4 August 2026.