The New VAT Rules For Online Retailers

From 1st July 2021, there are new rules for online retailers (eCommerce businesses) who make sales to customers in the EU.

Introducing the Import One Stop Shop (IOSS)

From the 1st July ALL imports to the EU will be subject to VAT. The IOSS has been established to help online retailers to account for and charge the VAT to the customer, rather than having the customer pay the VAT locally. However, if the order value exceeds 150 euros, the customer will have to pay the VAT rather than the retailer.

If you dont sign up to IOSS then your customers will have to pay the VAT.

What sales does IOSS cover?

Sales of goods which are dispatched and transported from outside the EU (i.e from UK) at the time they are sold and which the value does not exceed 150 euros.

How does IOSS work?

When you sign up to IOSS you need to apply VAT when selling to EU countries.

The amount of VAT that you charge will depend on the country you are selling to. For example, if you are selling to a customer in Spain, you need to charge VAT at the Spanish rate. The rates can be found online.

To register you need to register on the IOSS portal of an EU member state. I recommend Ireland’s as theirs will be in English, unless of course, you are fluent in a European language.

Once signed up, you provide the information to your courier, which includes your IOSS registration number.

You then need to display the VAT that is being paid by the EU buyer.

Then, each month you need to submit an electronic monthly VAT return via your IOSS portal and make the payment.

As usual, you must keep all your records, however in this case records must be kept for 10 years.

I sell using a platform what should I do?

If you sell using an online platform such as etsy, then they are responsible for the VAT rather then you.

This sounds like a lot of work, can you do this for me?

We are happy to work with you so that you are confident to raise EU invoices. We can then take care of the monthly returns, on your behalf.

Get in touch if you have any questions.