Changes to VAT from 1 July 2021

Following the end of the Transition Period on 31 December 2020, more fundamental changes are to come to the collection of VAT. These changes come into effect from 1 July 2021. The changes will apply to the sale of both services and goods to EU customers.

VAT changes on sales to EU customers

Three new schemes have been announced to help facilitate the declaration and payment of VAT:

  • Union One-Stop Shop: Allows UK businesses to hold stock within the EU and pay VAT for all EU sales to one Member State.
  • Non-Union One-Stop Shop: Covers supplies of services to EU customers by businesses with no establishment within the EU.
  • Import One-Stop Shop: Covers the distance sale of goods below €150 from stock held outside the EU.

One Stop Shop

According to these new rules, VAT can be paid to the Member State where the selling business is located. This is below a threshold of €10,000.

Above the threshold, businesses can easily register in a One-Stop Shop (OSS) where they can declare and pay the VAT
due in other Member States.

By registering, you will be able to:

  • Register for VAT electronically in a single Member State for all intra-EU sales of goods and B2C supply of services. (Rather than registration in multiple states.)
  • Declare and pay VAT on the supplied goods and services in one quarterly electronic return.)
  • Work with the tax administration in your own country and language, even if your sales are cross-border.

Union Scheme Vs Non-Union Scheme

Within the OSS, the Union Scheme covers intra-EU supplies of goods and services for businesses with their place of business or a fixed establishment within the EU.

The OSS “Non-Union Scheme” covers supplies of services to EU customers by businesses with no establishment within the EU.

Import One-Stop Shop

Many UK businesses that sell goods to EU consumers (B2C) have found themselves impacted by the EU/UK export and import changes from 1 January 2021. And from 1 July 2021, all goods imported to the EU from the UK will be subject to VAT.

The EU has confirmed the introduction of the optional Import One-Stop Shop Scheme (IOSS) which will help many
UK businesses sell low value consignments of goods to EU consumers.

The IOSS covers the distance sales of goods that are:

  • Dispatched or transported from outside of the EU at the time they are sold;
  • Dispatched or transported in consignments with a value not exceeding €150
  • Not subject to excise duties (eg, alcohol or tobacco)
Read our Fact Sheet

Get in touch

If you have any queries about these changes or would like advice your business, please get in touch with a member of our tax team on 01903 234094.