EU VAT E-Commerce Package: What Should You Know?

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Since 1 July 2021, there have been a number of European Union (EU) VAT changes that businesses should take note of. This includes the e-Commerce package that was launched on the same date - mostly impacting businesses outside of the NI and EU that supply low-value goods to these countries, and goods from the EU to non-VAT registered consumers in NI (and vice versa).

In this blog post, we’ll run through the key highlights from this package and the introduction of two new One Stop Shops.

 

1. The Newest Updates from 1 July 2021

Here’s a summary of changes that you’ll want to take note of following EU VAT from 1 July 2021: 

  • A single EU-wide VAT threshold of £8,818 will be introduced for Business to Consumer (B2C) sales of goods between EU member states (existing thresholds between countries will be removed)
  • The One Stop Shop (OSS) will be introduced to declare and pay VAT on B2C supplies of goods within the EU.
  • Low-Value Consignment Relief (LVCR) will be removed (meaning that all goods imported into EU will be subjected to VAT)
  • The Import One Stop Shop (IOSS) will be introduced to declare and pay VAT on the import of low-value consignments.
  • Online Marketplaces (OMPs) will be liable to collect and account for VAT on some goods supplied to consumers.

 

2. What do I need to know about the One Stop Shop (OSS)?

From the newest updates at a glance, we know that the distance-selling VAT thresholds in each EU member state has been removed and replaced with a single pan-European threshold of £8,818.

This would mean that there’ll be multiple EU member state VAT registration obligations. To make things simpler for us, the One Stop Shop (OSS) does the following: 

  • Businesses will register for VAT in a single EU member state or the UK.
  • The OSS will allow VAT on eligible supplies of goods across all EU member states to be reported and paid via a single quarterly return (this simplifies the need to register for VAT in multiple EU member states)

With that in mind, UK businesses should also take note of the following before registering for the OSS Union Scheme from 1 July 2021:

  • You must be VAT registered.
  • You are operating under the Northern Ireland Protocol.
  • You sell goods exceeding £8,818 (€10,000) to consumers in EU countries from NI.

 

3. What do I need to know about the Import One Stop Shop (IOSS)?

The IOSS is intended to simplify the declaration and payment of VAT on distance sales - from non-EU countries to the EU - with an intrinsic value of £135 or less.

Tip: The intrinsic value is the price the goods were sold at, without extra charges like postage and packaging charges

As we observed from the newest updates, the Low-Value Consignment Relief (LVCR) is being removed from 1 July 2021. To help businesses who are affected by extra VAT charges from their imports because of this, the Import One Stop Shop (IOSS) does the following: 

  • Those making distance sales to the EU can use the IOSS to declare VAT via a single return, rather than charging local sales or paying import VAT. 
  • It covers the sale of goods from a distance that are:
    • Dispatched or transported from outside of the EU at the time they are sold.
    • Dispatched or transported in consignments with a value not exceeding a total of €150 (that is, low-value goods).
    • Not subject to excise duties (typically applied to alcohol or tobacco products).
  • The VAT charged is declared via a single monthly IOSS return to the member state in which the supplier chose to register.

 

You might also want to take note of the following before registering for IOSS from 1 April 2021: 

  • The IOSS return will record your total value of goods sold, total VAT payable and the rates of VAT for each member state.
  • Make sure you provide your IOSS VAT identification number at the customs clearance point
  • Display the amount of VAT to be paid by the buyer in the EU

 

4. What do I need to know if I’m an online seller?

Folks who are using online platforms such as eBay and Amazon, fret not as you’re covered. When selling to EU customers, you don’t need to declare VAT on your sales from 1 July 2021. 

Under the new rules, you’ll only be liable to account for VAT on the supplies where:

  • A B2C supply is made into the EU from a non-EU country, with a consignment value below £135.
  • A distance sale is made within the EU, but the seller is not established in the EU.
  • A B2C domestic sale is made within the EU, but the seller is not established in the EU.

 

We hope this guide covers everything you’ll need to know about the newest EU VAT package. On that note, we can help your EU businesses to get registered for VAT in the UK. With our quality and professional services, Right Accounts will also save you the hassle of tax-return forms by completing them for you.

 

 Contact us here.

 

 

 

 

 
 
 
 
 
 
 
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