White Papers

3. Options for B2C E-commerce Sales into Europe from 1st July 2021

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This white paper outlines the options available to businesses making online B2C sales into EU member states from outside of the EU.

From 1st July 2021 the rules for ecommerce distance selling (business-to-consumer, B2C) in the European Union change. These changes can be utilised by all businesses established inside and outside of the EU, including the UK, and are not directly related to Brexit.

The changes are commonly referred to as the EU VAT E-commerce Package and the two key components are One Stop Shop (OSS) and Import One Stop Shop (IOSS).

From 1st July 2021, the VAT exemption for sales below €22 into Europe is also removed and all goods imported into the EU are subject to VAT.

It should be noted from the start that neither OSS nor IOSS are mandatory and that these new VAT measures are limited to online sales to consumers in the EU. 

Business to business (B2B) sales from a business in the UK to a business in an EU country continue as they have following the end of the Brexit transition period on 1 January 2021. Exports of goods should be zero rated and are then subject to tax in the destination country through the application of import VAT.

Starting 1 July 2021, online marketplaces/platforms such as Amazon and eBay will have new roles for VAT purposes in the EU:

• They may become “deemed suppliers”;
• They will have certain record keeping obligations.

Online marketplaces are considered a deemed supplier if they facilitate:

• Distance sales of goods imported to the EU with a value not exceeding EUR 150; and/or
• Supplies of goods to customers in the EU, irrespective of their value, when the underlying supplier/seller is not established in the EU (both domestic supplies and distance sales within the EU are covered).

Online marketplaces are not considered a deemed supplier for:

• Goods in consignments imported into the EU whose value is exceeding EUR 150, irrespective of where the actual supplier/seller is established;
• Goods supplied to customers in the EU, irrespective of their value, where the underlying supplier/seller is established in the EU.

For transactions where the online marketplace is the deemed supplier, the marketplace is treated for VAT purposes as if it is the actual supplier of the goods and will be liable to account for VAT on these sales. They will collect the VAT from the customer at the point of sale and remit it to the relevant tax authority, deducting the tax collected from the payment made to the underlying seller.

For those businesses selling into the EU via online marketplaces, they will despatch the goods using the Import One Stop Shop registration of the marketplace and their customers will receive the goods without the need to pay any further VAT. 

If you are currently selling goods into the EU via online marketplaces such as Amazon and eBay, ensure that you read any notifications that they send regarding the upcoming changes and carry out any actions they require to ensure that your account(s) with them are correctly configured.

The Import One Stop Shop was created to simplify VAT and to ensure that customers do not face unexpected fees when their goods are delivered.

It is designed only for relatively small transactions (up to €150) and allows a seller based outside of the EU to register for VAT in a single European country yet charge VAT at the rate for the particular country to which goods are being delivered.

Registering for IOSS is entirely optional - if sellers are not registered then any customers within the EU will pay the VAT and possibly other fees charged by the carrier, when the goods are imported.

If the seller elects to register for IOSS and makes an online sale of goods of a value of less than €150, they will need to apply the appropriate rate of VAT for the country where consumption of the goods takes place. The online seller will need to show/display the amount of VAT to be paid by the buyer in the EU, at the latest when the ordering process is finalised. If you have web sites selling B2C you will need to ensure that your sites have the capability to meet this obligation. 

The seller will also be required to:

• make sure that eligible goods are shipped in consignments not exceeding the EUR 150 threshold;
• to the best extent possible, show on the invoice the price paid by the buyer in EUR;
• submit an electronic monthly VAT return via the IOSS portal of the Member State where you are identified for IOSS;
• make a monthly payment of the VAT declared in the VAT return to the Member State where you are identified for IOSS;
• keep records of all eligible IOSS sales and/or sales facilitated over 10 years.

Your Delivery Service Provider(s) may offer 'Delivered Duties Paid' services.

These services allow sellers to collect additional amounts from their customers to cover the cost of both customs duty and import VAT. The carrier will then pay any customs duty and import VAT due on the consignment and charge it back to the seller, delivering the goods to the end customer with no further charges to them.

Since the UK left the EU 1st January 2021, the standard delivery service for both B2C and B2B sales of goods into the EU has been 'Delivered Duties Unpaid'. This is where the overseas post or parcel operator will collect the import VAT (and customs duty, if payable) from the EU buyer prior to delivery, alongside a handing fee.

This service will continue to be available.

Detailed information on the new EU VAT e-commerce rules is available at https://ec.europa.eu/taxation_customs/business/vat/vat-e-commerce_en

Information on the axis diplomat  IOSS module can be found at European Import One Stop Shop (IOSS)

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