Solution Properties
Solution ID:
222001000101230
Last Modified Date:
Fri Sep 15 13:13:46 UTC 2023
Taxonomy Path:
Case category//How do I...//governmental/legislative compliance
Author:
[email protected]
EU VAT e-commerce rules
Description

This is an optional scheme to help you report and pay all EU VAT through a single return instead of having to register and pay VAT in each country you sell to.

This applies to sales to individuals who are based in the EU and are therefore not VAT registered.

The schemes are called

  • The One Stop Shop
  • The Import One Stop - applies to businesses based in Great Britain only

For the One Stop Shop schemes, you use Destination VAT. Instead of charging VAT at the usual UK rate (or home rate), you charge VAT at the rate where your customer lives.

For example, if as a UK business you sell goods to a customer in France, you charge VAT at the rate applicable in France.

Visit our business legislation hub to see how this may affect your business.

Cause
Resolution

The One Stop Shop (OSS)

Use the One Stop Shop (OSS) to report and pay EU VAT on services to EU consumers which attract destination VAT. For a full list of services visit the European Commission website (opens in new tab)
The OSS can also be used to report and pay EU VAT in relation to intra-community distance sales of goods which are still relevant for businesses residing in Northern Ireland with an XI VAT registration.

On 1 July the EU also abolished distance selling thresholds and replaced them with a single EU wide €10,000 (£8,818) threshold.

The Import One Stop Shop (IOSS)

For Great Britain only

The IOSS can be used to report and pay EU VAT on goods imported into the EU from outside the EU destined for EU consumers with a consignment value of £135 (€150) or less.

If you use IOSS you will need to charge destination VAT at point of sale. This means there is no import VAT upon arrival in the EU, making it easier for your end customer.

How to register

The new One Stop Shop schemes are optional. If you want to register you can do this in either an EU member state or potentially in the UK depending on your location and the scheme you want to use. For the IOSS, you may need to appoint an intermediary to register on your behalf.

European Commission guidance on the One Stop Shop schemes (opens in new tab).

HMRC guidance on the One Stop Shop schemes (opens in new tab).

Destination VAT in Sage Accounting

Destination VAT settings and reports are available in Sage Accounting.

Apply destination VAT in VAT settings

Choose whether to apply destination VAT rules to EU consumers. We’ll automatically add ledger account 2206 VAT on Destination Sales so you can report separately on the total amount you have charged for destination VAT.

Apply destination VAT to services

Add OSS Services to each service item where destination VAT needs to be charged.

For a full list of services that attract destination VAT visit the European Commission website (opens in new tab)

Apply destination VAT to sales invoices

Once you add an EU consumer (not VAT registered) and an OSS service to an invoice, the destination VAT rate will automatically calculate.

Northern Ireland only

Once you add an EU consumer (not VAT registered) and a product to an invoice, the destination VAT rate will automatically calculate.

Great Britain only

Once you add an EU consumer (not VAT registered) and a product to an invoice, select Apply £135 (€150) consignment rules to charge destination VAT for goods with a value of £135 (€150) or less.

Recurring invoices and destination VAT

Once you apply destination VAT in financial settings, recurring invoices to EU customers will be paused and will show a status of Action Required. Create a copy of the invoice and the destination VAT rate will automatically calculate. Delete the original invoice.

Run the destination VAT report

The OSS Sales Analysis report in Reporting will show all sales where destination VAT has been charged. This will help you to complete your One Stop Shop VAT return.

Invoicing with destination VAT

Before you start

If you need to charge destination VAT, check that you have added:

  • Destination VAT rules in financial settings
  • OSS Services on each relevant service item
  • An EU customer who is not VAT registered

Businesses in Great Britain

Create a sales invoice for goods under £135

  1. Go to Sales, Sales Invoices, and select New Invoice.
  2. In the Customer field, select your EU customer from the list, or type the customer name. If the customer is not a saved contact, select Add a customer to create a record for them.
  3. Select Apply £135 (€150) consignment rules to charge destination VAT on goods with a total consignment value of £135 (€150) or less.
     TIP: For this option to show, check that you: selected destination VAT rules in financial settings and an EU customer that is not VAT registered
  4. On the first invoice line, select a product from the list, or start typing its name to find it. If the product is not a saved item, enter a description for the item or select Create item to create a record for it.
  5. In EU Goods/Services select Goods (and related services) to apply destination VAT rules. The destination VAT rate will automatically calculate.
    Repeat steps 4 and 5 on a new line for as many items as you need to add to your invoice. The total value of goods must not exceed £135 (€150).
     TIP: If you need to add a service item that does not have destination VAT rules, you must create a separate invoice. This is because invoices cannot contain a mixture of home VAT rules and destination VAT rules.     
  6. Select Save.
The VAT return

The VAT element on destination VAT sales is excluded from your VAT return. You need to report this on your IOSS VAT return through the IOSS system.

Create a sales invoice for OSS services

  1. Go to Sales, Sales Invoices, and select New Invoice.
  2. In the Customer field, select your EU customer from the list, or type the customer name. If the customer is not a saved contact, select Add a customer to create a record for them.
  3. On the first invoice line, select a service from the list, or start typing its name to find it. If the service is not a saved item, select Create item and apply OSS Services to create a record for it.
  4. In EU Goods/Services select Services (standalone) to apply destination VAT rules.
     TIP: To calculate destination VAT on the invoice, check that you selected:
    Destination VAT rules in financial settings
    OSS Services for the service item
    An EU customer that is not VAT registered
  5. Repeat steps 3 and 4 on a new line for as many items as you need to add to your invoice.
     TIP: An invoice cannot contain services subject to both home and destination VAT. If you need to invoice a service item that has home VAT rules, you must create another invoice.     
  6. Select Save.
The VAT return

The VAT element on destination VAT sales is excluded from your VAT return. You need to report this on your OSS VAT return through the OSS system.

Businesses in Northern Ireland

Create a sales invoice for goods

  1. Go to Sales, Sales Invoices, and select New Invoice.
  2. In the Customer field, select your EU customer from the list, or type the customer name. If the customer is not a saved contact, select Add a customer to create a record for them.
  3. On the first invoice line, select a product from the list, or start typing its name to find it. If the product is not a saved item, enter a description for the item or select Create item to create a record for it.
  4. In EU Goods/Services select Goods (and related services) to apply destination VAT rules. The destination VAT rate will automatically calculate.
     TIP: To calculate destination VAT on the invoice, check that you selected: destination VAT rules in financial settings and an EU customer that is not VAT registered.
  5. Repeat steps 3 and 4 on a new line for as many items as you need to add to your invoice.
  6. Select Save.
The VAT return

The VAT element on destination VAT sales is excluded from your VAT return. You need to report this on your OSS VAT return through the OSS system.

Create a sales invoice for OSS services

  1. Go to Sales, Sales Invoices, and select New Invoice.
  2. In the Customer field, select your EU customer from the list, or type the customer name. If the customer is not a saved contact, select Add a customer to create a record for them.
  3. On the first invoice line, select a service from the list, or start typing its name to find it. If the service is not a saved item, select Create item and apply OSS Services to create a record for it.
  4. In EU Goods/Services select Services (standalone) to apply destination VAT rules.
     TIP: To calculate destination VAT on the invoice, check that you selected:
    Destination VAT rules in financial settings
    OSS Services for the service item
    An EU customer that is not VAT registered
  5. Repeat steps 3 and 4 on a new line for as many items as you need to add to your invoice.
     TIP: An invoice cannot contain services subject to both home and destination VAT. If you need to invoice a service item that has home VAT rules, you must create another invoice.     
  6. Select Save.
The VAT return

The VAT element on destination VAT sales is excluded from your VAT return. You need to report this on your OSS VAT return through the OSS system.

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