From 1st July the European Union will be introducing a number of wide-range VAT reforms and changes covering both the distance selling of goods and B2C services.
When shipping to the EU from the United Kingdom after 1st July, you will need to be aware of how they may affect you.
What are these changes?
The €22 value added tax (VAT) exemption on goods imported to the EU will be removed. This means that all goods regardless of value will now be subject to VAT.
The introduction of the Import One Stop Shop (IOSS) to facilitate and simplify the declaration and payment of VAT for distance sales of imported goods with a value not exceeding €150.
What is the Import One Stop Shop?
The Import One Stop Shop (IOSS) is the electronic portal businesses can use from 1 July 2021 to comply with their VAT e-commerce obligations on distance sales of imported goods. By registering for IOSS, no VAT will be applied and charged when the parcels arrive at the EU customs facility, speeding up the release into free circulation of the goods to your customer.
What are the benefits of registering for the Import One Stop Shop (IOSS) for my online sales?
The IOSS facilitates and simplifies the collection, declaration, and payment of VAT for your online sales to your EU customers. It covers the purchase of goods made by a buyer within the EU and for goods valued at less than €150.
Can it improve the online shopping experience for my customer?
Yes! A key advantage with IOSS and charging VAT at checkout is that it avoids any unexpected charges and potentially customs delays when the goods are shipped. If you are not registered for IOSS, VAT must be collected from your customer when the goods arrive in the EU through the customs clearance process. This can be a slower and more costly process for your customer and may impact their experience.
What does having an IOSS registration involve?
You will need to:
• Provide your IOSS registration number in the electronic customs data file you submit to shipper
• Charge and collect the correct amount of VAT at the time of purchase to the buyer ( i.e. the correct VAT amount for the Member State in which your customer is located)
• Apply this only to goods with a purchase value up to 150 Euros
• Ensure you comply with the accounting obligations of the scheme