On July 1, 2021, the European Union will introduce changes to the existing VAT regime that will impact UK-EU trade. This memo covers the key points that will affect UK-EU trading that you should be aware of.

1. Removing The €22 VAT Exemption For Imports

The exemption for goods valued up to €22 no longer
applies. Therefore, VAT will be charged on imports to
the EU regardless of value.

VAT will apply at the rate of the buyer’s country of
residence. It is different for every EU country: for example,
Italy – 22%, France – 20%, Germany – 19% etc.

2. One-Stop-Shop (OSS) and Import One-Stop-
Shop (IOSS)

OSS and IOSS. The EU will introduce two measures
to assist e-commerce, two “one-stop-shop” procedures,
which will allow e-sellers to consumers to account for
VAT, without the need for multiple EU VAT registrations,
from July 1, 2021.

a) One-stop-shop (OSS) will be applied firstly for
EU countries. This OSS return is an extension of the
existing EU MOSS system for digital services.

There is an exception for EU businesses that sell
less than €10,000 per annum cross-border on business-
to-consumer (B2C) goods and services. These
businesses can charge their domestic VAT rate and report
sales in their usual domestic VAT return.

b) Import one-stop-shop (IOSS). UK businesses selling
goods from outside the EU to private consumers
valued at less than €150 can register for IOSS in just
one EU state. They will be issued a unique IOSS identi-
fication number which should be listed on all packages
sent to the EU. This will indicate to Customs that VAT
is being properly declared and help ensure speedy customs
clearance. Like the OSS, IOSS will be a quarterly
filing submitted to a tax authority in one nominated
EU member state. It will declare import VAT due in all
EU countries.

c) In the case of IOSS, import VAT will then be payable
in accordance with the VAT rate in the customer’s
member state (using the delivery address) in a quarterly
return submitted in the member state where registered.
This is different to a standard EU VAT registration
as it provides for VAT due in every member
state to be reported and paid through a single return.
On consignments below €150, the seller can instead
use simplified customs declarations, which requires
about 1/3 of the data needed for standard declarations.

d) For consignments greater than €150, normal
customs declarations and payment will be required(either by the seller of its agent-including postal service).
Duty will also be payable.

Northern Ireland. NI VAT would need to be paid once
the annual distance selling threshold is exceeded. From
July 1, 2021, distance selling thresholds will be abolished,
and VAT due on supplies to customers in EU countries will need to be accounted for under the One- Stop-Shop (OSS).

3. Online Marketplaces (OMP)
There are special rules for online marketplaces
(OMPs) where they are involved in facilitating the sale.
In this case, they are responsible for collecting and accounting
for VAT. EU marketplaces facilitating sales to
EU consumers (such as Amazon) will become responsible
for the VAT on the third-party supplier’s behalf, so
if selling products through such marketplaces, the VAT
will be taken care of at the point of sale by the marketplace
provider. The marketplace will be recognised
as the supplier.

Have a question? Contact Clifford Frank, lexefiscal.