THE EU VAT E-COMMERCE PACKAGE From 1 July 2021 the EU has implemented a number of new rules for business supplying goods or services to consumers in the EU. Abolition of low value consignment relief Prior to 1 July 2021 VAT was not payable on goods imported into the EU which have a value of up to €22. This relief has been withdrawn and VAT is now payable on all commercial goods when they arrive in the EU. Import VAT will be calculated using the VAT rate applicable in the EU destination country. Note that, unless the supplier takes responsibility for the VAT, the customer may have to pay import VAT (and possibly duty) before the customer can take delivery of the goods. Broadly, the choices available to the supplier wishing to take responsibility for the VAT are:• Pay the import VAT (and any duty) on behalf of the customer; or • Charge local VAT and pay it to the local tax authority UK businesses selling goods into the EU will have to consider how any VAT is to be paid and how this is communicated to their EU customers. One-Stop Shops The EU will be extending the existing, and introducing new, one-stop shops. These are optional schemes that allow businesses to pay EU VAT on sales to customers in any EU member state on a single return. This avoids having to register and submit returns in a number of EU member states. Once registered for a scheme the VAT due on all eligible supplies within the scope of that scheme must be returned under the scheme. The One-Stop shops are a payment system only, they do not allow VAT on any costs incurred in the EU to be reclaimed. 012
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Import One-Stop Shop (IOSS) This portal allows non-EU business who send goods to consumers in the EU to report and pay local VAT. Businesses who have signed up for the IOSS will have to charge VAT on sales at the rate applicable in the customers country. An IOSS return is submitted and the EU VAT is paid on a monthly basis. The IOSS allows goods to be cleared quickly through customs and gives the customer certainty over the price they pay. This could provide a significantly improved customer experience avoiding unexpected VAT payments before goods are delivered. The IOSS can however only be used for consignments which do not exceed €150, this is the value above which duty is payable. For consignments over this value VAT on the import will have to be paid on the individual consignment when the goods arrive in the EU. Non-EU businesses must appoint an EU-based intermediary to use the IOSS unless they are established in a country with which the EU has a VAT mutual assistance agreement, The goods also have to be supplied from that country to the EU. Currently the UK does not have a VAT mutual assistance agreement with the EU so a UK business wishing to use the IOSS system will need to appoint an EU intermediary. Whilst the scheme simplifies administration there will be an added cost, EU intermediaries can be expensive. One-Stop Shop (OSS) The new OSS replaces the current MOSS scheme. The MOSS allowed VAT on the sales of telecommunications, broadcasting and electronic services to consumers, located throughout the EU, to be reported on a single quarterly return. From 1 July 2021 the OSS covers all services supplied to EU consumers by non-EU businesses
