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Changes for businesses selling to consumers in the EU

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Since 1 January 2021, when the UK officially left the EU, UK businesses wishing to sell to consumers in the EU have faced the prospect of multiple VAT registrations across Europe and/or customers being charged VAT along with costly admin fees from the couriers before any goods would be delivered.

From 1 July 2021 the EU is putting in place the following measures that should simplify the process and therefore reduce costs:

  1. New rules for supplies made via an on-line marketplace
  2. New Import One-Stop Shop (“IOSS”) for imports
  3. Extension of the Mini One-Stop Shop (“MOSS”) to goods and other services though a new One-Stop Shop (“OSS”)

1. Selling through an online marketplace

The new EU rules will mirror those implemented by the UK on 1 January 2021 and apply to sales made through an “electronic interface” where:

  • The goods are located in the EU at the time of the sale, but the seller is not established in the EU, or
  • The consignment value is <€150 and the goods are located outside the EU at the time of sale.

When it applies, the electronic interface will be deemed to make the supply to the customer in the EU and therefore will need to account for the VAT.

The actual seller will be deemed to make a zero-rated supply to the electronic interface. This means that the amount you would receive from the electronic interface for the sale will be net of VAT.

2. IOSS for Imports

From 1 July 2021 the small consignment relief for packages worth < €22 is to be abolished and VAT will be due on all imported goods. In its place will be the IOSS which will apply for consignments worth < €150.

Through IOSS you will:

  • Nominate an intermediary if you are not established in the EU;
  • Charge VAT at the time of purchase at the rate applicable in the country of delivery;
  • Use a simplified declaration process on import, quoting your IOSS number on the declarations;
  • Submit monthly returns; and
  • Pay the VAT due.

The IOSS is not designed for sellers who sell through online marketplaces as it is envisaged that the online marketplace would be the importer. We are aware, however, that one particular large player in the market is refusing to be the importer at present and it remains to be seen whether these new schemes will change that position.

IOSS is open for registrations now so that you can be ready for the new scheme on 1 July.

3. One-Stop Shop

The extended OSS will cover sales to consumers across the EU of both goods and all services (including the supplies of electronic services previously covered by MOSS).

To access the OSS you will need just one VAT registration in the EU and then register for OSS through that country’s portal (similar to the previous UK MOSS portal).

There are 2 schemes within OSS: Union and Non-Union. Which scheme you need will depend on your establishment status and what is being supplied:

  • If you are making distance sales of goods from within the EU (e.g. from a fulfilment warehouse), or are established in the EU then use the Union OSS
  • If you are not established in the EU and are making supplies of services then use Non-Union OSS

Examples of services subject to Non-Union OSS:

  • Admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events; such as fairs and exhibitions;
  • Services of valuation and work on movable tangible property;
  • Ancillary transport activities such as loading, unloading, handling or similar activities;
  • Services connected to immovable property;
  • Hiring of means of transport.

Businesses can register for OSS or IOSS now so that they are ready for the new scheme on 1 July 2021.

Jane Stacey VAT director

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