What are the new EU VAT rules for online sellers?
- •How do UK businesses register for VAT in EU member states?
- •What is my IOSS number if I sell through a marketplace?
- •Do I have to sign up with the IOSS if I sell to the EU?
- •How do businesses in Northern Ireland pay VAT to the EU?
- •Do Northern Irish e-commerce sellers need to register for VAT in the EU?
- •A global account for cross-border businesses
If you sell items via ecommerce to customers who are in the European Union (EU), you will have been affected by several new rules since July 2021.
One of them is the elimination of a tax break called Low Value Consignment Relief (LVCR). Before that, any items sold to EU customers for less than €22 were exempt from important VAT.
It was found that the exemption was being abused, with sellers falsely claiming the price of expensive goods was under the threshold.
Now, the loophole has been closed. VAT will be charged on all goods entering the EU, just as it would be if the items were sold within the EU by European sellers.
VAT rates vary depending on which EU country you’re sending your goods to.
How do UK businesses register for VAT in EU member states?
Ecommerce sellers based outside the EU can now register for an electronic portal called the “Import One-Stop Shop” (IOSS).
This includes businesses in England, Scotland or Wales that sell goods or services to the EU. It also includes Northern Irish businesses that sell services to the EU. The IOSS can only be used for consignments of €150 or less.
IOSS is more transparent for customers, as they will see accurate VAT costs at checkout. There are no surprise fees as the goods move across borders, and the import process is streamlined.
If your business is established outside the EU, IOSS requires you to appoint an intermediary to act on your behalf. This applies to UK businesses.
What is my IOSS number if I sell through a marketplace?
Some marketplaces will collect import VAT automatically on applicable orders, as they have signed up to the IOSS.
If this is the case, and the price of the order is €150 or less, you need to include your marketplace’s IOSS number in your electronic shipping data fields when you are selling to EU customers. You may need to check the details with your marketplace.
Do I have to sign up with the IOSS if I sell to the EU?
No. If you don’t wish to register with the IOSS, and you don’t sell through a platform that is registered with it, VAT will be collected as goods cross into the EU.
This is currently the case for high-value goods. It is normally collected by the courier or postal carrier, who may charge a fee for this. The customer receives the goods once VAT is paid.
However, if you register for the IOSS, you must use it to pay VAT on all sales to the EU.
How do businesses in Northern Ireland pay VAT to the EU?
As well as the Import One-Stop Shop, there is a One-Stop Shop for online sellers within the EU who are selling to customers in other member states.
They can use this portal to take care of VAT for all their sales across the whole of the EU, in their own language.
This can be used for Northern Irish businesses selling goods — but not services — to customers in the EU.
Once registered, the online retailer can pay VAT in the One-Stop Shop via a quarterly declaration. The One-Stop Shop will take care of passing the payment on to the relevant member state.
Do Northern Irish e-commerce sellers need to register for VAT in the EU?
Previously, sellers in EU member states had to register for VAT in a different member state once they sold a certain amount of goods there, and this varied from country to country. The only exception to this was electronic services.
Now the threshold is €10,000 across all member states that company does business with. The OSS can be used to simplify this process.
This applies to Northern Irish businesses selling goods to EU member states. They can register for the OSS in a EU member state, if they have a fixed establishment there, or in the UK.
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Tilly manages the content strategy for Airwallex. She specialises in content that supports businesses in their growth trajectory.
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