An estimated 26,000 ecommerce sellers will face £180m in additional red tape costs, as the EU introduces new VAT rules on sales coming from outside the bloc.
Originally designed to crack down on VAT fraud amongst predominantly China-based ecommerce sellers, the new rules will also affect British companies following the UK’s departure from the EU. The new rules are set to come into effect from July 1.
The new EU ‘One-Stop Shop’ (OSS) rules will remove VAT exemptions from SMEs and shipments that do not exceed €22 (£19). This means that around 26,000 UK e-commerce sellers may want to register for VAT in an EU member state for the first time.
The majority of these companies will have to fork out at least €8,000 a year each, which is roughly £180m in total.
Rob McCann, Director at The Vat People, said of the changes: “The new e-commerce VAT rules represent a major change for sellers of goods to consumers in the EU. Affected businesses need to consider their options now so that they can avoid potential problems with regard to sales made on this basis.”
What can I do if this affects my business?
If the new VAT rules apply to your business, you’ll have three options when trading into the EU:
- Register for VAT in the country where you sell most of your goods
- Subcontract VAT to selling platforms such as Amazon or eBay
- Ask your postal service to handle VAT (with that VAT generally being paid by the customer prior to taking delivery of the goods).
With platforms typically charging sellers about 30 percent of gross prices for their VAT services, businesses doing more than 150 transactions a year should register themselves in an EU member state (although Amazon and other platform operators will be obliged to declare the VAT that is due on the transaction when it facilitates a supply of goods under 150 EUROS in value).
How can I register for the OSS?
Each EU Member State has an online OSS portal, where businesses can register from 1 April 2021 and can use it for transactions made on or after 1 July 2021.
This single registration will be valid for all eligible supplies made by online sellers (including electronic interfaces).
If you or your clients will be one of the traders impacted by the new rules and require advice, get in touch with us by calling 0161 477 6600, or fill in an online enquiry form and we will get back to you at a time that is convenient for you.
Watch Our Videos
Get the vital information you need quickly and easily by watching one of our guidance videos - topics include VAT assessments and penalties, VAT for charities, and maximising VAT recovery.