As of July 1st 2021, new VAT schemes will be made available for e-commerce businesses.
As of July 1st 2021, new VAT schemes will be made available for e-commerce businesses that sell to EU customers (customers in the EU who are not VAT registered).
The new optional VAT schemes for E-commerce are being introduced to support growing businesses by streamlining the VAT report process on sales to the EU. Therefore, allowing businesses to report and pay all EU VAT through a single return instead of having to register and pay VAT in each country they sell to.
What are the new VAT schemes?
The new schemes are:
- The One Stop Shop (OSS)
- The Import One Stop Shop
What is The One Stop Shop (OSS)?
The OSS can be used to report and pay EU VAT on services to EU consumers which attract destination VAT. It can also be used to report and pay EU VAT in relation to intra-community distance sales of goods which are still relevant for businesses residing in Northern Ireland with an XI VAT registration.
From 1st July the EU will also abolish distance selling thresholds and replace them with a single EU wide €10,000 (£8,818) threshold.
Sales reported through the One Stop Shop are subject to destination VAT. Instead of charging VAT at the UK rate (or home rate), you charge VAT at the rate where your customer lives. For example, if a UK business sells goods to a customer in France, VAT is charged at the rate applicable in France.
What is The Import One Stop Shop (IOSS)?
The IOSS can be used to report and pay EU VAT on goods imported into the EU from outside of the EU – that are destined for EU consumers, and have a consignment value of £135 (€150) or less. When using IOSS destination VAT must be charged at the point of sale. This means there is no import VAT upon arrival in the EU, making it easier for the end consumer.
How can you register your business?
It is important to note that the new One Stop Shop schemes are optional.
- Customers in the UK wishing to register can do this in either an EU member state or potentially in the UK depending on their location and the scheme they want to use.
- Customers in the Republic of Ireland can register for the OSS in an EU member state, usually their own. Once registered they can report all relevant EU VAT through a single return and make a single payment to the member state you register with.
If you have any questions about the VAT EU E-commerce packages and your Sage 200 system, please use the enquiry form or call us on 01332 587 515.