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Online sales goods to private consumers in EU post Brexit 

18 December 2020

Brexit

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In 2020 whilst the UK Brexit transitional period is in place, for goods dispatched from the UK to private customers (a b2c sale) in the EU, the seller is able to avoid VAT registration in another member state of the EU by using the “distance selling” thresholds, which typically allow sales of € 35,000 a year in each member state.  The UK seller charges UK VAT, unless the sale is zero rate (books, children’s clothing for example) and declares the VAT on their UK VAT return.  Alternatively, once sales to a country exceed the threshold, the seller must register for VAT in that member state and charge local VAT on all future sales to customers.

From 1 January 2021 the distance selling arrangements cease to apply to UK sellers. From 1 July 2021 two new EU VAT accounting schemes are to be introduced, explained further below.

From 1 January 2021

For the six months between January and the end of June 2021, goods sent from the UK to private customers in the EU will be zero-rated exports, but import VAT will be due on arrival in the EU member state where the customer belongs. Goods with a value less than € 150 (except alcohol, tobacco, perfume) will not be liable to customs duty when they are imported from a non-EU territory for delivery direct to an end consumer in the EU. There are three possible options as follows;

  • Arrange for your freight forwarder/express courier to manage the importation into the EU of packages for EU consumers and pay the import VAT (and possibly customs duty if value is greater than e150) on the customers behalf. The UK seller reimburses the freight agent for the payment.  Check with your courier if you need an EU EORI number.  The EU import VAT is not recoverable as input tax.
  • Leave the customer to account for import VAT and possibly customs duty by them liaising with their local Customs/tax authority.  This is probably the least viable commercial option, as it delays the delivery of the goods to the customer and places an administrative burden upon the customer.
  • Register for VAT in the member state of the customer, and obtain an EU EORI number to import into the EU. Charge domestic VAT to the customer.  This option will allow the UK seller to hold stock within the EU for the fulfilment of orders throughout the EU. The other benefit of holding stock in one EU member state, is that goods can be dispatched to private consumers in all other EU member states, using the distance selling thresholds (until the end of June).  

The current UK customs export declarations for parcel and postage, for movements to non-EU countries, will apply also to movements to the EU.  For postal consignments exported by the Royal Mail Group, the use of forms CN22 and 23 will apply for non-controlled goods with a value less than £ 900.  For all other postal movements an electronic full customs declaration must be submitted to HMRC.  For goods exported by express parcel operators other than Royal Mail, a similar full export entry is needed.

 

From 1 July 2021

The EU is to introduce two measures to assist e-commerce, two “one stop shop” procedures, which will allow e-sellers to consumers to account for VAT, without the need for multiple EU VAT registrations. The seller can choose either of the two simplifications described below or alternatively can register for VAT in each member state where they sell.

One stop shop (OSS)

For UK businesses selling goods to EU consumers, the OSS return will allow them to file a single quarterly return declaring and paying output VAT at the appropriate rates on these sales to consumers in all 27 member states.  The tax authority will distribute the tax to each member state as declared on the return.  This OSS return is an extension of the existing EU MOSS system for digital services.  The OSS return cannot be used for UK businesses who hold stock inside the EU or use the Fulfilment by Amazon (FBA) programme.

Import one stop shop (IOSS)

UK businesses selling goods from outside the EU to private consumers valued at less than e150, can register for IOSS in just one EU state.  They will be issued a unique IOSS identification number which should be listed on all packages sent to the EU. This will indicate to Customs that VAT is being properly declared and help ensure speedy customs clearance.  Like the OSS, IOSS will be a quarterly filing submitted to a tax authority in one nominated EU member state. It will declare import VAT due in all EU countries.