By Yasmine Lingemann
On the 1st of July 2021, EU VAT rules are changing. It’s affecting all businesses, but mainly B2C e-commerce sellers as well as online marketplaces based inside and outside EU that facilitate the sale of goods to customers in the EU.
Here at the British Chamber of Commerce EU & Belgium, we’ve got you covered. If you’re interested in learning more about the changes to VAT in the EU, why not come along to our free upcoming event on the 29th June: EU VAT Rules for E-Commerce: What’s Changing on 1st July? Member VAT experts will answer the following questions with practical case example explanations and advice:
What changes on July 1st?
What transactions are impacted by the changes?
Who is affected?
How will these upcoming EU VAT changes impact me and my business?
For businesses outside the EU that are trading to EU based consumers, there are 3 main changes:
- VAT exemptions on low-value goods removed
VAT exemptions on low-value goods (worth €22 euros or less) coming into the EU will be removed. VAT will now be charged on all commercial goods imported into the EU regardless of their value. For goods that are imported into the EU, VAT will apply at the rate set in the buyer’s country. For consignments with a value of €150 or below, this can either be charged at the time of the sale by using the new IOSS- Import One Stop Shop- or be collected by the customer’s declarant.
- An IOSS will be introduced
An IOSS, Import One-Stop-Shop for a single EU-VAT return will be introduced. Businesses signed up to the OSS will no longer have to register for VAT in every EU country. Instead, they can reduce their admin by logging all their eligible cross-border EU sales to consumers in a single electronic quarterly return. IOSS users will only need to pay the VAT to their home Tax authority. This will then forward it to the countries where the goods were sold. Those (based in one member’s state) making below €10,000 per year on cross-border sales of goods to consumers can charge their domestic VAT rate and report the sales as part of their regular domestic VAT return.
- VAT will be the e-commerce marketplaces responsibility
Rather than the seller, certain marketplaces like e-commerce sites will become liable for collecting, reporting, and paying VAT at the time of sale. This includes B2C imports of consignments up to €150 (when IOSS is used) and on intra-EU and domestic sales of goods by non-EU sellers to EU consumers. As a result, for B2C imports of consignments, with a value of €150 or less where the marketplace has opted in for the IOSS, businesses selling through it must use the marketplaces IOSS number and provide it for the party responsible for making the customs declaration. Non-EU businesses using online marketplaces only for this infra-EU and domestic sale of goods to consumers within the EU might be able to de-register for VAT in EU member states.
What is the IOSS Regime?
IOSS “import one-stop shop” is a new voluntary system for reporting and collecting VAT on B2C sales of low-value goods imported from non-EU countries. Suppliers and online marketplaces selling imported goods to EU buyers can use IOSS to collect, declare and remit VAT to the tax authorities, instead of making the buyer pay the VAT at the point of importation.
- Simplify customs clearance and import procedures for “low-value goods”.
- Increase transparency for customers
- Reduce administrative burdens with one registration for all sales.
- Increase the speed of goods being cleared through customs.
- Simplify logistics, as goods can be imported into the EU via any EU Member State regardless of their final destination.
How to apply?
- IOSS registrations opened on April 1st for all EU member states.
- If you are seller not based in the EU, you will need to appoint an EU intermediary to meet the seller’s VAT obligations under OSS.
Read more about these changes on our UK-EU Trade Hub here. We’re here to help you navigate through these changes as smoothly as possible, so please don’t hesitate to contact us for further information.
We will continue to update you with the necessary information to help all our members to succeed. We are all in this together, and with the right plans in place, consumer confidence can be restored. BritCham offers support, guidance and specialised coverage for both Brexit and COVID-19, including webinars, workshops and events that will give your firm the tools it needs to navigate through this challenging period.
See our website here for more details on how we can help you: https://www.britishchamber.be/