If you are a UK company that’s currently exporting and selling goods to consumers in the European Union (EU), then you need to be aware of major changes to VAT rules from 1 July 2021. These rules can be complex for business owners to understand, so we’ve summarised them here, but our advice is to seek independent advice from your accountant and use their VAT expertise.
The rationale for the VAT changes is to overcome barriers to cross-border online sales andto address challenges that arise from the VAT regimes for:
The new EU VAT rules will impact UK companies that sell and import goods into the EU. These new rules mainly affect businesses selling business-to-consumer (B2C) goods into the EU member states. They will apply whether you’re selling goods via your own online web-shop or via platforms such as Amazon, Shopify, etc.
From 1 July 2021, these extensive new VAT rules will be implemented by the EU for e-commerce. Because of the need to prepare in advance for these changes, we recommend that you don’t leave your planning or conversation with your accountant until the last minute.
Also See: VAT: Buying a car through the business
The main changes to be aware of are:
A GB business owner selling goods to EU consumers needs to at least familiarise themselves with the new IOSS and, where necessary, arrange to be registered under the scheme in a single member state or appoint an EU intermediary to act on its behalf.The business will need to determine whether they should register under the Union OSS or non-union OSS.
You need to fully understand which member states you trade with, which EU member state(s) you want to declare VAT and Customs duty, and how to register for the relevant VAT and duty.
You should also consider your supply chain to ensure that your supply chain providers can and will comply with these new EU requirements, and that the new process won’t impact on your costs and efficiency of supply.
These EU VAT changes mean that there is a complicated set of regulations for your business to comply with. It’s impossible for a business owner to understand them all and avoid mistakes or bad customer experience. So, it’s imperative that you contact your accountant to help you to review, prepare and be ready for these new VAT rules.
If the EU is one of your primary markets, the additional red tape and administration could have a significant impact on your ability to trade efficiently with EU consumers.
Being able to continue to offer consumers a great shopping experience and avoid difficult situations where your customer can’t receive their goods is key. Without careful planning your B2C customers may face higher prices, requests to pay VAT on their purchases and the inconvenience of extra duty costs on delivery.
The red tape will become far more complex from July, so it’s essential to look at the compliance and record-keeping requirements now. The sooner you seek help from a specialist, the sooner they can review your situation, highlight the potential problems, and help you to find the right solutions.
DNS Accountants can give you tailored VAT advice and solutions. We can help you register with the new One-Stop-Shop (OSS) system and help you set up an EU administrative HQ to ensure you decide on the best EU member state to declare your EU VAT & Customs duty (if this is applicable).
Any questions? Schedule a call with one of our experts.
Sumit Agarwal Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.
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