B2c Sale of Goods - 1st July Changes

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Looking for a second opinion on whether I'm completely missing something here as feel out of my depth..

I have a client who sells goods to consumers in the EU. Total sales to EU is no more than around £6500 per year and it's a relatively small amount compared to overall turnover. A mixture of order values over and under £135.00 are sent via Royal Mail.

In this interim Brexit period between Jan-June they are zero rating the sale and letting customer deal with import VAT seperately their end, where applicable.

From 1st July , assuming client will not be going down route of establishing a presence in the EU or moving stock there, are these the options (some clearly better than others but just trying to get full picture...):

1) Do nothing and continue zero rating all sales, resulting in even more customers dealing with import VAT their end regardless of order value now that low value limit will be gone.

2) Register for IOSS so that sales under £135 can be charged with foreign VAT at point of sale to avoid customer paying import VAT. Presume sales over £135 stay same as per above (zero rate here, customer pays import VAT their end?).

3) Register for VAT seperately in each EU country where sales are made. All EU sales would then have VAT added at foreign country rate, regardless of value?

I think where I'm getting confused is the specificially the over/under £135 changes. If the client continues to make sales under £135 do they HAVE to either register for IOSS or individually in each EU country (as if), or can they just continue zero rating at the risk of annoying consumer who would be hit with a potentially unexpected extra cost...

Any thoughts welcome!

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VAT
By Jason Croke
24th May 2021 21:30

Your list of three options is correct, nicely researched.

They are all optional, it is mainly driven by the customer experience whether you go for IOSS on sales under £135.

Where customers order goods over £135 then it's either zero rated from UK and customer picks up the VAT tab locally or you register for VAT in customers location.

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