VAT rules change for e-commerce from 1 July 2021

23 Jun 2021

stack of money

From 1 July 2021, the EU VAT e-commerce package comes into effect, introducing a raft of new measures in respect the sale of goods to EU customers and certain B2C services.

The changes – and the actions that businesses will need to consider – are summarised below:

Abolition of low value consignment relief and introduction of Import One Stop Shop

  • The EU will abolish low value consignment relief and all goods will become subject to import VAT upon their arrival into the EU.
  • The importer on record will be required to pay the import VAT under the normal rules.
  • Businesses selling goods to customers in consignments of EUR 150 or less that require importation into the EU can apply to use a simplification measure called the Import One Stop Shop (IOSS) from 1 July 2021, which will enable them to account for EU import VAT via a single pan-EU return (IOSS return).
  • Businesses selling imported goods into the EU in consignments of EU 150 or less should consider registering for IOSS to relieve customers from having to clear the goods through customs.
  • Non-EU businesses will need to appoint an intermediary to register for IOSS, and for ongoing compliance. An intermediary must be a tax practitioner with a fixed establishment in an EU member state.
  • IOSS registrations are available in EU countries or the UK (although the UK IOSS registration portal will not be available for use by 1 July 2021).

Abolition of EU distance selling thresholds and introduction of One Stop Shop

  • EU “distance sales” thresholds will be abolished for B2C intra-EU sales of goods to private individuals. Instead, a new EU-wide threshold of EUR 10,000 will apply. This means that retailers that were previously trading under the EU distance selling threshold in the member state of the consumers may be required to register for VAT in multiple EU countries following 1 July 2021.
  • Businesses with multiple EU VAT registration obligations resulting from intra-EU B2C supplies of goods (and certain B2C services), can use a simplification measure called the One Stop Shop (OSS) from 1 July 2021. This will enable VAT from across the EU to be accounted for in a single pan-EU return (OSS return).
  • The OSS is effectively an extension of the Mini One Stop Shop (MOSS) that is currently used by businesses to account for VAT on EU B2C sales of broadcasting, telecommunication and electronically supplied services (BTE). On 1 July, MOSS registrations will automatically be converted to OSS registrations.
  • Retailers selling goods located in the EU to private consumers in a different EU member state need to consider their EU VAT registration obligations following the abolition of the distance selling thresholds.
  • If appropriate, register for OSS in the EU member state where you are established/goods are located.

Online market places (OMPs) are the deemed seller of goods

  • OMPs such as Amazon and eBay will become the “deemed supplier” and liable for collecting VAT on the following sales of goods “facilitated” through their website:
    • Sale of goods in consignments not exceeding EUR 150 that require importation into the EU.
    • Domestic and intra-EU sale of goods to non-business customers of any value within the EU on behalf of non-EU sellers.
  • If your business sells through an electronic interface marketplace such as Amazon or eBay, you should consult their documentation about how the deemed seller rules will affect what you sell.
  • If you are an online market place, assess whether you are a “deemed” seller and liable to account for VAT in the EU as a result. Register for IOSS and/or OSS if appropriate to simplify VAT accounting.

How can Saffery help?

Our experts can help businesses by:

  • Advising on the implications of the 1 July 2021 changes and whether IOSS and/or OSS registrations are appropriate.
  •  IOSS:
    • Providing intermediary services to enable businesses to register, file and pay EU VAT liabilities via the monthly IOSS return.
    • Preparing and reviewing IOSS returns.
  • OSS:
    • Assisting with OSS registration.
    • Preparing, reviewing and submitting OSS returns.
    • De-registering businesses from EU distance sales VAT registrations.

If you have any questions, please speak to your usual Saffery partner.