There are changes commencing on 1 July 2021 that impact how VAT is accounted for on the trade of goods within the EU, as well as how VAT on some services can be accounted for in the EU.
There are also additional rules that deviate from the norm, with regards to Northern Ireland, which now has its own unique VAT status, as it remains part of the EU in theory, with regards the supply of goods
Businesses selling into the EU will be subject to VAT at the time of supply if sales of goods do not exceed £135 (€150) in the EU (including the Northern Ireland) from a non-EU country (e.g. the UK). This is similar to what the UK has already implemented from 1 January 2021, for importation of low value goods into the UK.
Distance selling thresholds i.e. thresholds for selling goods to private individuals from one EU country to another, are to be reduced throughout the EU (and Northern Ireland) to €10,000, which is a single EU-wide threshold, not a threshold for each country.
Where the place of supply is an EU country, a local VAT registration may be required, which can result in multiple registrations throughout the EU. For example, admissions to an educational or cultural event, transport of goods and some land related services made to private individuals. However, this can now be taken care of under a single registration in an EU Member State.
Online marketplaces (OMP) can in some circumstances be the deemed seller and the importer of goods into the EU and Northern Ireland.
An OMP that is registered for the IOSS will be liable to account for the supply VAT on imports of low value goods into the EU.
This is where complications may arise, based upon the various permutations and where the goods are located. However, the key point is if an OMP is involved, the liability to account for VAT may shift to the OMP, depending upon the exact circumstances and nature of the supply chain.
UK sellers of goods and services into the EU will need to be aware of the rules.
If you would like to discuss the new rules further and the impact on your business and supply chains, please contact our VAT director Jas Dhillon (firstname.lastname@example.org), or your usual Lubbock Fine contact.