Cross-border VAT e-commerce rules are changing from 1 July 2021, in a bid to modernise the existing VAT framework, and level the playing field for EU and non-EU businesses supplying to EU customers. The new rules are also intended to reduce the costs of complying with cross border VAT reporting obligations in the EU.

The new rules apply to product shipped into the EU and will have a significant impact on B2C e-commerce imports, affecting everyone in the supply chain including UK retailers, marketplaces and postal/courier companies selling to EU consumers. It’s possible that some B2B imports will be impacted too, although not as significantly.

What is changing?

From 1 July 2021:

  • All goods imported into the EU will be subject to European VAT regardless of value (previously the EU allowed a €22 EUR low-consignment relief on items sold into the EU)
  • The existing Mini One Stop Shop (MOSS) framework will be replaced by the new Non-Union One Stop Shop (Non-Union OSS)
  • The existing Union scheme for intra-EU supplies of TBE services will be extended to cover all types of B2C services
  • New Import One Stop Shop (IOSS) is to be introduced for goods delivered from outside the EU, which requires the supplier to charge and collect EU VAT at the point of sale with VAT settled via the IOSS

What impact will this have on UK based businesses?

The changes have the potential to causes large-scale disruption for e-commerce businesses based in the UK selling to customers in the EU, which may have a detrimental impact on some business as charges will be levied on the customer at the border before they can be released. However, the new rules do provide an opportunity, particularly for larger e-commerce businesses, to benefit from a simplified VAT returns process.

Whilst the changes are more likely to affect B2C sales, it is probable that any business that buys or sells into the EU will be affected at some point, and its therefore vital you understand the impact these changes will have on you and your business. We therefore recommend all businesses who send goods into the EU to end customers begin preparations now, to ensure readiness ahead of the 1 July implementation date.

To avoid disruption as much as possible, we recommend you assess the potential impact to your business and understand the options available.

Get in touch

Our team of dedicated VAT experts have extensive experience advising businesses on all aspects of cross-border trade, helping both importers and exporters thrive through changing EU regulations by implementing solutions to ensure businesses don’t get caught out.

If would like to speak with one of our advisors to better understand the new rules and specific implications they may have on your business, please get in touch today. We can help you understand the new rules whilst formulating strategies to ensure you are in the best position possible moving forward.