08 Jan 2021 3:49 PM

From 1 January 2021, EU retailers selling goods directly to UK customers need to navigate new tax laws introduced following the UK’s departure from the EU.

EU businesses are now required to fill in customs forms to sell directly to customers in the UK. A business selling goods directly to UK customers must register for VAT in the UK and account for it to HM Revenue & Customs if the sale value is less than €150 (£135). This is to put an end to overseas sellers posting low-value goods to Britain without accounting for the tax owed.

This change has affected many specialist suppliers and smaller online shops.  Many EU businesses have stopped selling directly to UK customers; others have temporarily halted while they evaluate if this new red tape involved in selling directly to UK customers is worth it. Some EU businesses are keen to continue selling to the UK market and have applied for a UK VAT registration, but are waiting for the approval and so are unable to continue accepting orders from the UK until this is sorted.

From July 2021 a similar VAT rule will be introduced within the EU. However, it will be a simplified version for EU retailers.  They will be able to register in one member state, rather than registering with every country in the EU where they sell. The upshot is that is that it will be less onerous to sell to customers within the EU.  If the EU market is sufficient, this may mean that smaller specialists suppliers may decide not to sell directly to UK customers.