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EU’s VAT e-commerce changes on 1 July 2021

Helping you get ready for the EU’s VAT e-commerce changes on 1 July 2021

Major changes with regards to the EU Value Added Tax (VAT) are coming to businesses selling goods to customers located in the EU. The changes will take effect on 1 July 2021. The EU’s Import One Stop Shop (IOSS) can help you start or continue trading from GB into the EU. We have three options to help you manage these changes – depending on the size and nature of your business.

As of 1 July 2021, items imported to the EU with a value of €22 or less will no longer be exempt from VAT. This means that all goods sent directly from GB to consumers in the EU, both via online marketplaces and sales made directly, will be subject to the local rate of VAT in your customer’s country.

Current Situation

 

As of 1 July 2021

How can I register for IOSS?

You can either register and file your own tax returns, or we can assist you to do so, via our new IOSS Registration and Filing Service – offered by Deloitte. If you register yourself, all you need to do is input your IOSS number into the correct field, where requested, on the Royal Mail shipping platform you use.

If you don’t want to register yourself, we also have Taxamo Assure – an innovative pay-as-you-go solution which is perfect if you simply want to concentrate on selling. See below for further details.

What happens if I don’t act?

If you don’t have a solution in place by 1 July 2021, your items will be delivered by Delivery Duties Unpaid (DDU). Subsequently, customers may have to pay import VAT and a handling fee in the receiving country before they can receive their parcel from our delivery partner. Whatever the case, this could lead to delays, returns and a poor delivery experience. Some customers might refuse delivery, rather than pay these charges.

 

Three options to consider

In response to the 1 July 2021 changes, if you are a business who sells to customers in the EU, you have several options to consider.

1. Selling through a marketplace

If you sell through a marketplace, they are likely to have registered for IOSS. If so, you just need to assign their IOSS number in the pre-advice to us for the items sold through the marketplace.

 

2. The Import One Stop Shop (IOSS)

You can register for IOSS yourself or choose one of our ‘assisted’ IOSS solutions. You will then be able to calculate and collect VAT from your customer at the checkout and pay it directly to the EU. You just need to assign the right IOSS registration number to each item in the pre-advice you give to us.

 

3. Postal Delivery Duties Paid (PDDP)

PDDP is currently undergoing trial, due to be operational by July. If IOSS isn’t for you, or you are sending items above €150, this may be the answer. PDDP allows you to calculate and collect VAT from your customer at the checkout and to pay the EU tax authorities via Royal Mail.

 

So what’s best for you?

Whichever IOSS solution you choose, Royal Mail can despatch your items and ensure they get delivered across the EU without delay. Here are the different options at a glance to help you decide what best suits your business.

Please note: If you are despatching goods from Northern Ireland to the EU, IOSS cannot be used to declare and pay VAT on your EU sales. Instead, you can make use of the One Stop Shop (‘OSS’) which is another EU VAT scheme that allows you to declare and pay VAT on all sales into the EU in one single VAT return (alternatively, you can register for and pay VAT in each member state you are selling goods to). If your overall annual sales from NI to consumers in all EU countries doesn’t exceed €10,000 you can continue to charge UK VAT to your EU customers.

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