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Sales of goods to EU over 150 euros from July 21

What is the correct VAT treatement?

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Hi

I have read, and think I understand, what needs to happen for our client selling goods via their website to EU customers for under 150 euros, from July 2021 onwards.

But what about sales over this amount? Do they charge no VAT and leave it to the customer to declare it?

 

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Jason Croke
By Jason Croke
09th Mar 2021 11:22

The EU published more detailed guidance on this https://ec.europa.eu/taxation_customs/sites/taxation/files/vatecommercee... and typically EU, is 99 pages of incredibly precise legal language and diagrams. If you wade through to page 78 it explains in more detail the "special" arrangement rules.

In essence, a UK business selling to EU consumers under £135/€150, can zero rate sale and customer pays import VAT their end or the UK business can use Import One Stop Shop (IOSS) from July 2021 to make the customer experience more agreeable by charging EU VAT at point of sale and goods get delivered without further to pay by seller or customer. It makes for a nicer customer experience.

For over £135/€150, the UK business selling to EU consumers can simply zero rate/customer pays the import VAT (same as above) or it can look to hold stock somewhere in EU and register for VAT there. UK seller can't use Import One Stop Shop because that is designed for under £135 sales because no import duty applicable at that level, whereas goods are over £135 they may be subject to import duty so we can't have a scenario whereby seller charges VAT at time of sale but then has seller or customer still has to pay import duty and extra VAT (as VAT is based on net+duty).

Do understand that this area is sort of complicated, depending upon the precise setup of the transaction, are the goods coming from outside EU direct to EU consumer or is stock held in the EU (ie, via Fulfilled by Amazon), so my post here is not meant to be a catch-all response.

I'm doing an article on this for AccountingWeb, just going through the usual checks and 2nd pair of eyes before being published.

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