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1st July 2021 New EU VAT Rules for UK Exports - my own understanding


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Hi there, l've written up a précis of the 1 July 2021 changes. There are still some weak areas, see wherever it states "ASSUMPTION(S)" in block caps. If there are any mistakes or ambiguities in my writeup, please point them out:
 
 
 
### To sell an item for under 150 EUR to the EU, with the new rules effective 1 July 2021:
 
{BORING PART: - A single EU-wide distance selling VAT registration threshold of 10,000 EUR will apply and replace the country specific intra-EU distance selling thresholds. This means that if you make sales to non-VAT registered buyers in any EU countries, and the combined total of those sales exceeds EUR 10,000 (£8,818), you will need to collect VAT in all EU countries based on the delivery address. To do this you will either have to register for VAT in each of the EU countries where you make sales, or use the EU VAT One Stop Shop (not actually OSS if you are selling from UK to EU, instead it is called IOSS, Import One Stop Shop for us in the UK).}
 
 
If the 10,000 EUR threshold doesn't apply i.e. if you are just an ordinary seller on eBay:
- As a non-VAT registered seller, you would do nothing
- As a VAT registered seller, you would still do nothing, except you will not charge VAT to your non-UK customers, but this is the same as ever
 
 
- Alternatively, you could become VAT registered in the EU via the IOSS scheme (ASSUMPTIONS: presumably you can use OSS even if you are below the EU VAT registration threshold, and apparently you won't need to even be UK VAT registered). That is what it's for - it allows you to appoint a fiscal representative in the EU to submit your VAT returns to the EU (but you must still of course pay that VAT).
 
- Some online marketplaces and even courier aggregator (courier comparison) sites allow the option to use their own OSS service, known as an "electronic interface". Otherwise you would have to find your own fiscal representative (this will need to be done if you run a shop from your own website for example).
 
 
 
### Benefit of the IOSS scheme:
 
- You don't need to VAT register in each EU member state
- Effectively streamlines customs clearance ("green channel" fast customs clearance for consignments not exceeding 150 EUR), and removes the customs clearance fee (this is fee levied by the courier for payment of import fees, whether you pay the courier those fees upfront to the courier or pay the courier those fees after clearance).
- Makes you more competitive against other EU sellers
 
 
 
### Benefit of IOSS scheme over DDP:
- There is no courier customs clearance fee
 
 
 
### Downsides of the IOSS scheme:
 
- If registering yourself and not via a third party such as an online marketplace or courier aggregator website (i.e. not via a third party's "electronic interface"), the cost of appointing a fiscal representative can be £2,000-£8,000 per annum according to some quotes
 
- Goods exceeding 150 EUR in value will exceed the IOSS threshold and therefore the import VAT will have to be paid to customs by those directly involved in the import (seller or buyer - via courier in either case) and not by a fiscal representative. This would be on a DDP or DDU basis. This could also trigger a regular VAT registration in the country of importation, if the seller wishes to sell the goods there - or to the rest of the EU.  
 
 
 
 
 
 
N O T E S :
 
 
### Note about DDU (now called DAP, "Delivered At Place" or DPU, "Delivered At Place Unloaded", with place of delivery specified e.g. DAP Amsterdam): the buyer must pay the customs clearance fee as well as all other import costs. ASSUMPTION: I believe this is also true of cargo shipments, not just retail to end user packages.
 
 
 
### Note about Simplified Customs Declaration (simultaneous to IOSS changes):
 
To help importers and customs authorities cope with the ballooning volume of low-value consignments, the standard customs declaration for goods not exceeding 150 EUR is to be condensed. From July 2021, sellers will be able to provide a simplified declaration at the point of import into the EU via their courier service. This is a "super-reduced dataset" for the party declaring the import.
 
 
The existing duties exemption for most goods not exceeding 150 EUR will remain in place.
 

 

Edited by cubicsquare
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  • cubicsquare changed the title to 1st July 2021 New EU VAT Rules for UK Exports - my own understanding
  • 1 month later...

I'm just a small UK seller well below the threshold to have to register for VAT.  EU sales are also well below £8818 per annum.  

If I understand it right it's not economical or practical for me to register for this scheme for cubecart sales to the EU & therefore my EU customers would be liable for VAT & admin charges on items I send them.

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Hi there, here is what l wrote about that, it's a weak spot of my post:

"(ASSUMPTIONS: presumably you can use OSS even if you are below the EU VAT registration threshold, and apparently you won't need to even be UK VAT registered)"

 

And yes, if you don't use an IOSS number, then your customers will get their items later, and they'll have a customs clearance fee on top of the tax and duties to pay.

 

With IOSS, they'd get it faster, with tax and duties having already been paid at P.O.S., and there won't be a customs clearance fee.

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