The low value import VAT threshold of €22 was abolished in June 2021. All exports (which now include sales of goods to the EU) are subject to VAT. Where the total value of the shipment doesn't exceed €150, the seller can opt to charge VAT at the point of sale to avoid the customer needing to pay import VAT in their member state, which can lead to delays.
Now the Import One-Stop-Shop
The new Import One-Stop-Shop (IOSS) can be used for these types of sale, which can simplify reporting. If a business registers for the IOSS, it will account for VAT on a monthly return in the country in which it chooses to register for the scheme. This means the business can benefit from a single VAT registration to trade with all 27 EU member states for low-value sales avoiding the need to either have customers deal with import VAT or have multiple VAT registrations.
The process
Upon registration, an IOSS registration number will be issued. This will need to be used for all eligible shipments, and the invoice should also be used as evidence that the shipment does not exceed the €150 limit. HMRC must also be informed of the registration and IOSS number.
Be aware…
A potential problem with the scheme is that non-EU businesses normally need to appoint an EU-based representative who will be responsible for filing the IOSS returns and accounting for the VAT. This is not required where a mutual assistance agreement exists, but to date there is no accepted agreement between the UK and the EU, and so appointing an intermediary is compulsory. This will involve additional costs, and so the overall costs and benefits of using the scheme should be carefully weighed up.
The information provided in this blog is for general informational purposes only and should not be considered professional advice. As far as we are aware, the content is accurate at time of publication. Torgersens assumes no responsibility for errors or omissions in the content or for any actions taken based on the information provided.
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