2021 EU VAT Survival Guide – In Partnership with SimplyVAT

Evenstone work closely with SimplyVAT to ensure all your UK & EU VAT accounting needs are met.

We’ve have partnered with SimplyVAT to bring you a ‘VAT Survival Guide’ to help you get your head around the recent changes, ensuring VAT compliance when selling into the EU. 

2021 has brought changes for e-commerce sellers operating within Europe. At the start of the year, Brexit changes came into effect and in July the EU launched the EU VAT Ecommerce Package.

What’s changed? 

From the 1st July 2021, the European Union has updated the legislation on how online sellers must handle collection and remittance of VAT within the EU. With the growth of the ecommerce market in recent years, the EU has taken action to level the playing field by requiring that VAT be paid to the tax authority of the country in which the customer is located. 

Some of key changes include: 

  • Removal of State-by-State Distance Selling Thresholds & Low Value Consignment Relief (LVCR)
  • Changes to VAT liabilities for marketplace sellers
  • Introduction of the new OSS/IOSS schemes
  • VAT must now always be charged at the local rate of where the customer is based

Marketplace Liability

One of the biggest changes to come out of the EU VAT changes this year was the way in which marketplace sellers handle their VAT. With the number of people selling online via Online Marketplaces rapidly growing, the EU wanted to make this process easier for sellers and shift the VAT burden from the individual sellers to the marketplaces themselves. From July, Online Marketplaces, in certain instances, are now considered to be the “deemed supplier” and are liable for the VAT owed on those sales. 

In the following situations the marketplace will be the deemed supplier for the transactions and is responsible for charging and remitting the VAT owed on the sales:

  • Non-EU established businesses with goods based inside the EU at point of sale (please note that holding stock within a member state will still trigger the need for a local VAT registration).
  • Businesses (both, non-EU or EU established) with goods based outside the EU at point of sale with a consignment value of less than EUR 150.

What is OSS?

The One Stop Shop (OSS) has evolved from the previous Mini One Stop Shop (MOSS) scheme. Originally created to cover the sales of digital goods, this scheme was expanded in July to cover the B2C sales of all goods sold within the EU, which are inside the EU at the point of sale, and some services within the EU. 

This gives businesses the option to streamline their VAT reporting. Instead of multiple local VAT registrations and returns where thresholds have been crossed, businesses can now register for OSS in a country where they are already locally VAT registered and file a single quarterly return to report all eligible sales.

What is IOSS?

The Import One Stop Shop (IOSS) is another new scheme but is instead used to report the VAT on sales of B2C supplies to EU customers, where the goods are located outside of the EU at the point of sale. These goods sold under the IOSS scheme have the added benefit of fast-tracked customs procedures allowing for a smoother importation process.

As with OSS, IOSS also allows you to reduce the number of countries you need to register and file returns for. IOSS returns are due on a monthly basis.

Which scheme is right for you?

If you are considering simplifying your EU VAT reporting with the new OSS or IOSS schemes, take SimplyVAT’s quiz to find out which schemes you may be eligible for. Answer a few quick questions and you will get your results straight to your inbox.

Common Questions about the EU VAT reforms

Here are a few of SimplyVAT’s most commonly asked questions about the EU VAT changes: 

Will the EU Distance Selling Thresholds continue to apply? 

No, under the new EU VAT rules for ecommerce, the distance selling thresholds will be abolished. 

For EU-based businesses, there will be a single EU-wide threshold set at EUR10,000. While for non-EU businesses, there will be no threshold and you must be VAT registered from your first sale. There is also no threshold for businesses who dispatch goods from multiple member states- VAT must be charged from the first sale. 

How do I calculate the consignment value? 

When calculating the intrinsic value of a consignment of goods, you do not include shipping and insurance costs. However, when calculating the VAT owed on the sale, you do include shipping and insurance as well as the value of the goods.

Is the Low Value Consignment Relief (LVCR) scheme available? 

The LVCR scheme has been abolished from 1st July 2021. Prior to these revisions, goods valued under EUR22 imported into any other EU country could be imported without any VAT or duty having to be paid. Sellers will now need to use the IOSS scheme, or deliver the goods with the customer as the importer of record where VAT will be due as the goods cross through customs.

For more answers to SimplyVAT’s most asked questions, check out their FAQ page.

What’s next? 

For more information on the recent changes to EU VAT, SimplyVAT have put together a handy eBook covering, in detail, everything you need to know about how to stay compliant when trading within the EU. 

If you are selling into the EU and would like to get VAT registered, or if you are unsure on your VAT obligations, speak to a member of our team who would be happy to help.