We may have left the EU, but when they change their rules, any UK business trading with the EU is affected, so you may need to know about the new rules.
Introduction of the One Stop Shop (OSS)
You will likely have heard about MOSS (Mini One Stop Shop) which has now been around for a few years. MOSS enables businesses selling digital services B2C (business to consumer) to EU consumers to submit one MOSS return covering their VAT for all EU countries with which they trade, rather than registering and filing VAT returns in each country.
From 1 July 2021, this has been extended and renamed the OSS (One Stop Shop). This will now include all B2C supplies of services, as well as sales of goods. Non-EU sellers, such as UK businesses, are also able to file OSS returns for B2C services sold. The OSS return reports sales by EU country and the VAT due. The VAT is then paid to the tax authority in which they are registered for onward distribution to each relevant EU country.
Previously we had distance selling thresholds for goods, which have now been scrapped, and where businesses exceeded those thresholds, they would have had to register for VAT in each country. Due to the changes, they would now be able to deregister from those countries, except where they continue to hold stock.
A €10,000 threshold was already in place for MOSS and that will apply to sales that fall within the OSS as well. If sales to EU consumers fall below €10,000, they will not be required to register for OSS. However, importantly for UK businesses, this threshold does not apply to non-EU businesses and therefore a UK business has a €nil registration threshold, meaning they will have to register as soon as they commence trading in the EU.
Introduction of the Import One Stop Shop (IOSS)
The exemption on low value consignments, those less than €22, has been withdrawn effective from 1 July 2021. Now import VAT is due on all goods imported to the EU.
So as to prevent this becoming an issue for consumers importing goods, suppliers now also have the option to charge VAT at the point of sale, i.e., supply VAT, rather than import VAT where the value of goods does not exceed €150. They would then collect and pay the VAT through a new return called the IOSS (Import One Stop Shop). No import VAT is then paid on entry to the EU.
The IOSS will report VAT collected throughout the EU for consignments imported into the EU.
Non-EU sellers will also be able to register for IOSS but will likely have to do so through an intermediary, or fiscal representative.
Similar to the rules that came into the UK from 1 January 2021, the EU have also brought in rules from 1 July 2021 which deem the marketplace to be the seller and require them to account for VAT.
The new rules will apply where the marketplace is facilitating a B2C sale for imports by EU and non-EU sellers of goods up to €150 in value and also for any goods sold by a non-EU seller on a cross border or domestic basis.
We've put together a few case studies to illustrate how the new VAT rules work.
Should you have any queries about the new rules, or how they may affect you, please contact our specialist advisors.