EU e-commerce package for VAT
The EU e-commerce package came into effect on 1 July 2021. It introduced reforms in respect of the movement of goods from Northern Ireland to the EU and imports of low value goods into the EU or Northern Ireland.
Who is affected?
The changes will affect you if you:
- sell or supply goods from Northern Ireland to non-VAT registered customers in the EU;
- make supplies of goods from the EU to non-VAT registered customers in Northern Ireland;
- send low value goods to Northern Ireland or the EU from Great Britain or elsewhere outside the EU and Northern Ireland; or
- are a non-EU business with goods located in Northern Ireland at the point of sale.
New distance selling threshold
A new pan-European distance selling threshold of €10,000 (£8,818) applies from 1 July 2021.
The new distance selling threshold will apply to you if you are a business selling goods to consumers based in Northern Ireland. You will fall within the scope of the rules if the annual value of your sales of goods across the EU exceeds this level. There is no need to take account of sales of services as these do not count towards the threshold.
One Stop Shop
A new One Stop Shop (OSS) has been introduced to prevent businesses falling within the scope of the rules from having to register in each EU member state in which they have customers. If you are a Northern Irish business selling goods in excess of the new €10,000 threshold to EU consumers, you can register for the OSS, rather than registering for VAT in each member state in which you have customers. Registering with the OSS is optional, but it will enable you to declare and pay VAT for EU goods quarterly via one online portal. You can register either in the UK or in a member state with which you do business. If you register in the UK, you will need to be registered for UK VAT, even if your turnover is below the VAT registration threshold.
Low value consignment relief
Low Value Consignment Relief (which provided an exemption from import VAT for consignments of goods valued at less than €22 which were sold online to customers in the EU) was abolished with effect from 1 July 2021. This means that if you sell goods online to EU customers, you will now need to pay import VAT in the country in which the customer is based.
Import One Stop Shop (IOSS)
The Import One Stop Shop (IOSS) was introduced from 1 July 2021. The IOSS, which can only be used for consignments valued at €150 (£135) or less, allows registered businesses to collect the import VAT on business-to-customer (B2C) orders at the point of sale. If you do not register to use the IOSS, VAT will be collected on importation into the EU, as for high value consignments.
If your business is established outside the EU, to use the IOSS, you will need to appoint an intermediary to act on your behalf. This will be the case if your business is established in the UK.
The package also introduces new rules for supplies made to online marketplaces importing goods into the EU and Northern Ireland. These are similar to the rules that have applied for imports into Northern Ireland from outside the UK and the EU since 1 January 2021.
We can help
We can help you understand what the reforms mean for you, and what you need to do. We can also explain how the rules apply to you if you use an online marketplace to import goods.