If you supply goods or services into the EU, then it’s important that you know about the recent changes regarding VAT and duty treatment goods sold and/ or shipped to customers within the European Union.
Breaking any new rules can be detrimental to your business, which is why it’s so important to understand the changes to VAT that happened on the 1st July 2021.
It can be tough keeping up with the ever-evolving regulations that apply to businesses and selling goods, but thankfully, we’re here to give you the update.
If you supply goods or services into the EU, keep reading to learn more about the changes to VAT that occurred back in July, to make sure you and your business is doing everything by the book.
One Stop Shop (OSS) Regime
The Mini One Stop Shop (aka MOSS) became available on the 1st of Jan 2015 and benefited anybody supplying telecommunications, broadcasting, and electric services to non-taxable member locations that don’t have a location to account for the VAT.
It’s an optional scheme and simplifies the VAT process as it allows you to avoid registering in each location you provide goods or services to.
If you didn’t partake in the scheme, you would’ve had to directly register for VAT in other EU countries, which would’ve been a longer process than using MOSS.
If your business was non-EU based, you were free to choose a Member State as a base for your business registration, reporting, and notification.
If your business was EU based, you would’ve registered for MOSS in the country you live in.
Distant Selling Regime
Before the VAT changes in July, supplies of goods to individuals (B2C) in the EU were accounted for and recorded in the country in which the goods were dispatched.
This meant that businesses in the UK charged and accounted for VAT on goods supplied from the UK to EC customers.
The distance selling rules meant that when specific sale values in each EU location were surpassed, businesses were required to register VAT in that location, and VAT was charged in those affected areas.
This rule was abolished when the UK left the UK on the 1st of January 2021.
The changes on the 1st July this year meant that the historic distance selling rules and regulations were replaced by an EU-wide value of €10,000 .
Any sales that exceed this threshold will have to register for VAT in the area in which the goods and services are being sold – whether it be goods or electronically provided services.
If the goods your business is selling from the UK to an EU country are over 150 euros, and the transport is sorted by the supplier, then there are changes to the VAT accounting procedure.
The July 2021 rules mean that your suppliers may have to register an account for VAT in different EU countries.
However, if this is the case, your business can not use a new One-Stop-Shop (OSS) VAT accounting process that accounts for overseas VAT and means you won’t have to register in the countries you supply to.
Make Sure You’re Prepared
It’s important to make sure that you’re abiding by these new changes that occurred on 1st July 2021 – so if you haven’t already, make sure that you:
- It’s important that you assess your VAT accounting requirements for the EU – you may need to update your systems and data to identify and apply the correct VAT rates in the relevant countries.
- Figure out and confirm exactly which areas of your business(es) have been affected by the July 2021 VAT rules regarding the UK’s exit from the EU.
- Decide whether you want to register for the IOSS platform to pay VAT in the EU for business to consumer shipments of up to 150 euros.
- Take a look at your current foreign EU VAT registrations and decide whether you want to replace them with a single IOSS registration.
- If your business isn’t EU-based and you’re interested in registering for IOSS, consider appointing an intermediary to make sure that you’re compliant with taxes regarding the EU.
- If you sell online, contact the platform that you sell from to check who is responsible for the VAT on business to consumer shipments of up to 150 euros.
- If your business is affected, make sure that your shipping procedures and system are updated.
Keli Evans, Director at LJS Accounting Services, excels in taxation and statutory accounts. With a focus on strong client relationships, she leads a diverse portfolio, overseeing vital financial aspects like VAT, payroll, pensions, and taxation with a holistic and committed approach.