Will the EU distance selling thresholds continue to apply in the EU after 01 July 2021?
No, under the new EU VAT rules for ecommerce, the distance selling thresholds will be abolished.
For EU based businesses – a new registration is being introduced for EU based businesses – OSS (One Stop Shop) from 1st July 2021, a single EU-wide threshold set at EUR10,000 will be introduced.
There is no threshold for non-EU sellers – such as UK or USA based ecommerce businesses.
There is also no threshold set for businesses shipping goods from several member states.
This new threshold will cover any cross-border intra-EU distance sale of goods as well as any sales of digital services for private consumers.
As soon as the EUR10,000 limit is breached during a calendar year, any intra-EU sale of services and goods will need to be charged at the destination country within the EU (where your customers are located).
Businesses will need to determine where their customers are based at the point of sale, and which VAT rates apply to your products as soon as your cross-border turnover exceeds the new EUR10,000 threshold.
You, as the seller, and NOT the marketplace have the VAT obligations if you are an EU based business selling goods which are already in free circulation in the EU or goods above EUR 150 in value which are imported in the EU.
For non-EU sellers holding stock in an EU country, the OSS registration will need in one of the EU member state where stock is held.
Once registered for OSS, you have to report where OSS is applicable, you can’t pick and choose eg. If you are an EU business that sells both goods and services, you can’t use OSS just for the goods and not the services, you need to use OSS for both.
You cannot reclaim purchases via OSS, therefore you will have to reclaim any purchase VAT via the EU VAT Reclaim mechanism if a VAT registration is not required or in the local VAT return if you’re required to register for VAT.
Where should I register for the new OSS?
If you are an EU-based business, you will need to register for the OSS in your member state of establishment.
For non-EU sellers holding stock in the EU, the OSS registration will need to take place in one of the member states where stock is held.
I am a non-EU based business that sells via Amazon Pan-EU Fulfilment Service – what rules apply to me?
Post 1st July 2021, if you use Amazon’s Pan-EU Fulfilment Service, you will still need to have the local VAT registrations in the countries where you hold your stock. You will also need to file EC Sales Lists to account for any cross-border stock transfers.
If you sell your goods which are valued below EUR150 and imported in the EU via a marketplace eg. Amazon or eBay, the marketplaces will now be responsible for the collection and payment of the VAT to the relevant tax authority.
If you as the seller are based outside the EU and sell goods of any value which are already in free circulation in the EU via a marketplace, the marketplace will now be responsible for the collection and payment of the VAT to the relevant tax authority.
If you sell your goods via your own website, you will have to register for VAT under the IOSS (Import One Stop Shop) scheme.
If you sell via the Amazon Pan-EU Service and your goods are over EUR150 in value, you will need to register for OSS.
If you are based in the EU, you will apply for OSS in the country where you are established.
If you are based outside the EU, you can choose which country to register for OSS in, however, if you hold stock in any EU countries, you need to choose a country where you do hold stock.
If you hold stock in more than one EU country, you can choose which country where you hold stock to register.
What is IOSS (Import One-Stop Shop)?
The Import One-Stop Shop (IOSS) is the electronic portal businesses can use from 1st July 2021 to comply with their VAT e-commerce obligations on distance sales of imported goods.
IOSS only relates to the distance sales of imported goods with a value of less than EUR150.
If the sale of the goods is made through a marketplace, the marketplace is considered to have made the sale and is therefore liable for any VAT owed.
IOSS is designed to allow suppliers and marketplaces selling imported goods to EU consumers to collect and pay the VAT to the relevant tax authorities, instead of the buyer paying the VAT at the point of import.
The Low Value Consignment Relief scheme will be abolished by the EU (European Union) from the 1st July 2021. Before these revisions in the regulations, goods valued under EUR22 imported into any other EU country could be imported without any VAT or duty having to be paid.
The new IOSS scheme replace this scheme as of 1 July 2021.
All commercial goods imported into the UK from 1st January 2021 and into the EU from a third country or third territory from 1st July 2021 will be subject to VAT irrespective of their value.
What supplies of goods does IOSS cover?
Distance sales of goods imported from any country outside the EU.
Goods imported in consignments with a value of EUR150 or less (even if the order contains more than 1 item).
For goods imported which are above EUR150, these are subject to normal customs procedures and taxed at importation into the EU country.
Duty is not payable on goods under the value of EUR150, only VAT.
How do I calculate the value of the Goods/Consignment. What does it include?
When calculating the intrinsic value of the goods, you do not include shipping and insurance costs.
However, when you calculate the VAT owed on the sale by the consumer, you do include shipping and insurance as well as the goods value.
How can I register on the new IOSS?
IOSS Registration Portals should open in EU member states from 1st April 2021.
If you are an EU-based business, you should register for the new IOSS in the country where you are established.
If your business is not based in the EU, you will normally need to appoint an EU-established intermediary who will be jointly liable for any import VAT owed.
Norway is currently the only country outside the EU which does not require an intermediary to be used by a non-EU company.
Is the Low Value Consignment Relief (LVCR) Scheme available?
The Low Value Consignment Relief scheme will be abolished by the EU (European Union) from the 1st July 2021. Prior to these revisions in the regulations, goods valued under EUR22 imported into any other EU country could be imported without any VAT or duty having to be paid.
I sell Digital Services via VAT MOSS – what will happen post 1st July 2021?
After July 2021 VAT MOSS will be expanded to cover all cross border B2C sales of services to consumers in the EU not just digital services and is renamed OSS (One-Stop Shop).