Important VAT updates if you import or export goods

From the 1st July there are some significant VAT changes regarding importing or exporting goods.

Important VAT updates if your import or export goods

If you import or export goods to or from the EU, or plan to in the near future, these VAT updates are important for you.

There is a lot to consider, but we have tried to explain it as simply as we can. If you do have any questions though, don’t hesitate to contact us.
All changes will be effective from the 1st July 2021.

€22 VAT Exemption for imports will be removed

Prior to the 1st July, there was no import VAT due on goods up to the value of €22. However, VAT is now due on all imports into the EU, regardless of their value.

Instead, VAT will now be due at the time of supply for imported goods and will be charged at the VAT rate applicable to where the customer lives. This means that:

  • VAT will need to be charged at the appropriate rate where the item or items are shipped
  • You will need to register for VAT in at least one of the EU Member States

Selling goods already located in the EU

If the goods that you sell in EU countries do not need to be imported, as they are already located in the EU at the point of sale, you can register for the OSS (One-Stop Shop) scheme.

This will simplify up to 95% of VAT obligations for online sellers and electronic interfaces throughout the EU, as it allows them to:

  • Register for VAT electronically in a single Member State for all intra-EU distance sales of goods and for business-to-consumer supplies of services;
  • Declare and pay VAT due on all supplies of goods and services in a single electronic quarterly return;
  • Work with the tax administration of their own Member State and in their own language, even if their sales are cross-border.

(Source: European Commission)

Selling goods to EU countries – the Import One Stop Shop (IOSS) scheme

If you ship goods which are less than €150 from outside the EU (including the UK) to private individuals in the EU, you can register for the IOSS scheme.

  • You will receive a specific IOSS VAT number.
  • You package the goods with the IOSS VAT number clearly visible and quote the IOSS VAT number on the import declaration.
  • No import VAT is then due at importation into the EU.
  • You can then submit an IOSS VAT return (which may need to be done by an EU intermediary) in order to pay the EU VAT due for each member state.

What about Online Marketplace rules?

Online Marketplace (OMP) rules apply where:

  • You are not established in the EU, or you are established in the EU but your goods (valued at less than €150) are to be imported from outside the EU; and
  • You sell to individuals through online marketplaces (e.g. Amazon and eBay);

In these circumstances the OMP is treated as selling the goods to the end customer and the OMP is responsible for accounting for the VAT to the relevant tax authority.

You will make a ‘deemed’ sale to the OMP, which should be zero rated for VAT purposes.

Need Help?

We are Cottons London, small business accountants and branch of top 100 firm Cottons Chartered Accountants. We specialise in support for small businesses and freelancers in London.

If you would like help with this, or anything else with regards tax, accounting or business planning, please contact us today to set up a remote meeting.

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