The EU is introducing some VAT changes from 1 July 2021 which may make it easier for UK businesses to sell goods to EU consumer customers:
Goods below €150 sent direct to EU consumers from the UK
In the case of goods valued at less than €150 (£135) there will be a new special scheme, known as the import one stop shop (iOSS). This will allow a UK business to register for VAT in a single EU member state and use the scheme to pay VAT in advance on goods to be sent to EU consumers. The package can then be delivered directly to the customer without any requirement for them to pay import VAT. All VAT collected for each EU member state will then be accounted for through a single one stop shop VAT return. There will be a requirement for the shipper of the goods to be aware that the iOSS is in place so that the goods can be delivered without further payment.
Goods over €150 sent direct to EU consumers from the UK
The default position for goods above the €150 threshold is that import VAT is due on delivery to the consumer customer. In order to facilitate delivery to EU consumers without further payment being required, UK suppliers may want to consider local VAT registrations in each member state where their customers are located so that import VAT can be reclaimed and local VAT charged on the supply to the customer, again avoiding the need for VAT to be paid by the customer before delivery can be made.
Fulfilling sales within the EU
UK online sellers to EU consumers, particularly when selling goods valued at more than €150, could also consider changing their supply chain so that all goods for EU customers are imported into a single EU member state and distributed to EU customers from that base. A VAT registration in that member state will allow that them to take advantage of a further special scheme also being introduced on 1 July 2021 which allows VAT to be accounted for through a one stop shop (OSS) VAT registration on all sales to EU consumer customers. This OSS removes the need for distance selling registrations in individual member states which were previously required.
Goods sold via online platforms
UK sellers using online platforms will need to follow the platform’s guidance on accounting for VAT on EU sales.
For more details contact Wendy Andrews on firstname.lastname@example.org.
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