Published: June 25th, 2021 in Accounting, Latest News
Following the end of the transition period on December 31, 2021, fundamental changes are to come into effect from July 1st, 2021 regarding the collection of VAT.
The changes will apply to the sale of both services and goods to the EU. To support UK traders, HMRC will introduce new VAT e-commerce IT system to link with the new EU-wide IT systems.
From July 1st, 2021, the £22 low consignment exemption will be scrapped. All EU imports will then be subject to VAT in the relevant country of import.
However, for consignments with a total aggregate value of less than €150, the VAT will be charged at the point of sale, rather than at the point of arrival in the customer country.
The optional Import One Stop Stop Shop (IOSS) greatly simplifies VAT procedures by allowing no-EU online sellers (this now includes sellers based in Great Britain post-Brexit) to register for VAT in one EU member state, collect VAT from all their EU sales and report on a single monthly IOSS VAT return. This means no more multiple VAT filings in multiple countries.
A UK business registering for the IOSS will receive a unique number that must be quoted on all shipments to the EU.
If your consignment is valued at £135 or more, then-current rules continue to apply (i.e Import VAT is due). Until the system is fully implemented businesses can register in any EU Member State.
Further guidance regarding the UK IOSS registration portal will be made available in due course.