Eu sales after July the first 2021: The importance of intermediaries
From the first of July, new rules on how goods are taxed take effect. At the same time, a new regime determining how sellers pay taxes which may be due comes into force.
However, weather UK sellers are exempt from requiring an IOSS intermediary is still to be decided.
With little time left before the changes happen, Spring is here to help you understand how they may impact on your business and what you can do to cope.
From July the first, the existing VAT exemption for sales to consumers in the EU of goods worth less than €22 will be ceased.
Instead, VAT will be imposed on all sales from non-EU territories - with duties in addition if an item's value exceeds €150.
Although these new tax rules apply to everybody, the new regimes designed to help businesses deal with the changes are not mandatory and allow for some choice depending on the type and value of goods being shipped.
Retailers which are not based in the EU can use either the Import One-Stop Shop (IOSS) or the Union One-Stop Shop (Union OSS) to settle the VAT which is due.
Both schemes allow a single registration to pay whatever VAT is due to any of the 27 EU member states.
However, one essential requirement for participation in the OSS system is that non-EU retailers, including those in Asia or the Americas, which don't have a physical presence in the EU, are required to retain an intermediary (for the IOSS) or fiscal representative (Union OSS) to process the relevant paperwork and pay taxes on their behalf.
An intermediary is an individual or organisation who, by registering with tax authorities in one or more of the EU member states, is provided with their own unique identification number to use for customs clearance purposes.
They are then entitled to also register every seller which they represent and will receive an IOSS VAT number for each.
Once registered through their nominated intermediary or fiscal representative, sellers must provide accurate information on what exactly has been sold.
The intermediary then includes those details on a tax return through the IOSS/Union OSS and settles whatever taxes are owing.
Just over a month before the scheme is due to begin operation, some of the details of how intermediaries will be used are still to be clarified.
For instance, only retailers based in Norway which sell to EU customers do not need an intermediary, although a decision is still be made about whether a similar exemption will apply to sellers in the UK.
As part of one of the world's largest post and parcel companies, PostNL, we know that the sheer number and complexity of change taking place in July might be difficult for some retailers to cope with.
That's why if you have any questions about how they may affect you, your local Spring sales team is on hand.
We can help you ensure that you are fully prepared and able to continue to keep your EU customers satisfied.
After all, we are Spring.
We listen, we inspire and we deliver.