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Communication: Upcoming Legislation Changes: EU VAT e-commerce package

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Summary

This communication was issued to our Partner community.

Description

This communication was sent on the 14 June 2021.


Upcoming Legislation Changes: EU VAT e-commerce package

Notice 21-CD | 14 June 2021


Dear Partner,

From 01 July 2021, the EU will introduce new optional VAT schemes for sales to EU consumers (customers in the EU who are not VAT registered).

  • The One Stop Shop
  • The Import One Stop Shop

These new schemes allow businesses to report and pay all EU VAT through a single return instead of having to register and pay VAT in each country they sell to.

As a Sage Partner, it’s essential you’re aware of these changes and have all of the information you need to hand, ensuring you can support customers and help them manage through these changes.

For example, if a UK business sells goods to a customer in France, VAT is charged at the rate applicable in France.

As a Sage Partner, it’s essential you’re aware of these changes and have all of the information you need to hand, ensuring you can support customers and help them manage through these changes.

The One Stop Shop (OSS)

The OSS can be used to report and pay EU VAT on services to EU consumers which attract destination VAT.

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.

From 1 July the EU will also abolish distance selling thresholds and replace them with a single EU wide €10,000 (£8,818) threshold.

The Import One Stop Shop (IOSS)

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

When using IOSS destination VAT must be charged at point of sale. This means there is no import VAT upon arrival in the EU, making it easier for the end consumer.

How will customers register?

It is important to note that the new One Stop Shop schemes are optional.

  • Customers in the UK wishing to register can do this in either an EU member state or potentially in the UK depending on their location and the scheme they want to use.
  • Customers in Republic of Ireland can register for the OSS in an EU member state, usually their own. Once registered they can report all relevant EU VAT through a single return and make a single payment to the member state you register with.

You can learn more on the schemes via the European Commission guidance and UK Government guidance on VAT E-Commerce package.

What do I need to know?

To prepare for these upcoming changes, you can find useful information in our compliance help centre. This gives you an overview of the changes and our per product approach.