Update on international business from Advanta Chartered Accountants

B2C imports into EU

From 1 July 2021, the European Union (EU) introduced reforms to the Value Added Tax (VAT) obligations for business-to-consumer (B2C) e-commerce retailers and marketplaces. The EU launched the Import One Stop Shop (IOSS) on 1 July 2021 with the aim of simplifying the declaration and payment of VAT for goods imported with a value not exceeding €150.

B2C before 1 July 2021

Before 1 July 2021, goods sold to EU consumers by online stores and marketplace sellers at the value of €22 or less were exempt from VAT. For goods valued over €22, it was the responsibility of the customer to pay the owed VAT, unless the seller met the country's VAT registration threshold requirements.

B2C from 1 July 2021

The VAT exemptions on importing goods with a value of €22 or less has been removed. All goods imported to the EU will be subject to VAT at the member states rate.

Import One-Stop Shop (IOSS)

Seller's using the scheme will be required to display the amount of VAT payable by the consumer in their respective EU member state before the ordering process is finalised. The sales invoice will need to disclose the following additional information:

• Sales value in Euro's, split between net, VAT (at consumers EU member's state rate) and gross;
• IOSS number.

With the above additional information, it will allow for the goods to pass through customs without incurring import VAT. The seller then needs to report the VAT collected at the point of sale within the 27 EU member states in their monthly IOSS returns.

The online marketplaces (OMP) such as Amazon, eBay and Etsy will become responsible for charging and collecting VAT on imports up to the value of €150. The OMP will charge the customer VAT at the point of sale and declare this to the relevant member state instead of the seller. However, the seller still needs to keep 10-years' worth of sales records. The OMP will provide the seller with their IOSS number and will produce the invoices required for the carrier to ship the goods.

Businesses established outside of the EU, will normally need to appoint an EU established intermediary to fulfil their VAT obligations under IOSS. The intermediary is jointly and severally liable with the business registering for IOSS. The intermediary will be required to pay the tax office on behalf of the business. If the business decides to sell solely via an OMP, then the OMP will deal with compliance of IOSS.

The IOSS is not mandatory and sellers can still ship items through the Delivery At Place (DAP) and Delivery Duty Paid (DDP) models:

• Delivery At Place (DAP) – The seller is not required to charge VAT to the customer as this will be borne by the customer before they are allowed to receive the goods.
• Delivery Duty Paid (DDP) – The seller usually charges VAT to the customer but it's not mandated to show the customer the charges when applying DDP.

All items shipped with values above €150 will not be covered within IOSS.

Further advice

Advanta Chartered Accountants are based in the UK and have a department that deals with:

• international business services
• international accountancy services
• international tax services
• expat tax services.

We can provide guidance and assistance on any international and cross border activity for businesses and individuals.

Contact Us