Are you ready for the EU E-Commerce VAT reforms?

Are you ready for the EU E-Commerce VAT reforms?

On 1 July 2021, the European Union’s (EU) E-Commerce reforms will be introduced and this will affect all EU and Non-EU businesses selling goods and services to European consumers. This could be through dedicated websites, marketplaces like eBay or through social networks like Facebook.

This is to ensure fair competition between EU and non-EU businesses and fight against VAT fraud more effectively.

What was the old regime?

The new reforms will include the withdrawal of the current VAT distance selling regime which allows businesses that sell goods direct to consumers (B2C) from one EU country, to charge the VAT rate of the country of dispatch. This is until VAT thresholds are exceeded in the country of delivery.

Once these thresholds are met in the country where the goods are delivered (typically €35,000 or €100,000), you (the seller) will have to register in that country and start charging the VAT rate of that country.

What will Change?

From 1 July 2021 all supplies of goods and services to EU consumers should be taxed where the consumer belongs meaning UK businesses could have been faced with registering for VAT in all 27 EU countries.

To reduce the administrative burden and costs for sellers the EU will introduce the option to report all cross-border B2C distance sales in the form of a One-Stop-Shop (OSS) VAT return.

The OSS is an electronic portal that allows you to declare and remit VAT on most EU wide B2C sales. The OSS will not take away the requirement for businesses to charge VAT in each EU member state, however, it will allow you to register in only one EU member state to report and pay the VAT on these transactions on a quarterly basis.

What do I need to do?

If you are affected by this you will need to ensure your business is ready by 1 July 2021 otherwise there could be significant delays in shipping goods to your customers.

You will need to register for the new OSS. There are three schemes available, the Non-Union Scheme, Union Scheme and the Import One Stop Shop and you will need to register for the scheme applicable to your type of business.

Your websites and prices will need to be updated and you will need to check any legal requirements/rules in relation to how you operate online for any countries you are operating in.

There will be additional record keeping requirements you will need to follow dependant on the scheme applicable to your business and there is a possibility of strict penalties for failure to comply. There will also be additional quarterly VAT returns to complete for the OSS so there may be some additional administration work needed.

If you would like any further information or would like to discuss the impacts on your business in more detail please don’t hesitate to get in touch.



Gillian Cookson
Tax Manager
direct dial: 01942 292546
mobile: 07484 271884