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Selling low value goods into Europe, is this the Brexit sting in the tail?

With the continual advancement in technology and in particular the ability for people to sell their products on marketplace websites such as Amazon and eBay, it has never been easier for someone to sell into new market places.

When the United Kingdom was a member of the European Union (EU) there were certain reliefs available that could potentially avoid costly and complex overseas VAT registrations, however following Brexit that has now all changed. To add to the complexity, with the aim of avoiding distortions in competition across the EU and to simplify VAT registration requirements further changes have been made with effect from 1 July 2021 which mean it is very easy to be caught out by the VAT position.

From 1 July 2021 the EU have abolished the Low Value Consignment Relief affecting most many mail order suppliers. Goods to a value of €150 (net of VAT and any delivery costs identified to the customer) will enter the EU VAT and duty free, but the overseas supplier (or a marketplace platform acting on their behalf) will be obliged to account for VAT in the member state of the consumer, at the rate in force in that country for the goods involved. There is also no VAT registration threshold in many countries meaning several UK businesses supplying private customers in Europe may immediately be required to be VAT registered in Europe.

Accordingly, this will either entail multiple registrations throughout the EU or registration to complete Import One Stop Shop (IOSS) returns allowing all the VAT to be collected through a single European VAT registration. All rather complicated, especially when you consider all the different VAT rates that could apply in the different member states.

So what should UK businesses be thinking about?

  1. Do these rules apply to me?
  2. If so can the marketplace being used help to administer the VAT returns that may be required?
  3. If not where should we look to register in Europe? (Many people are choosing Ireland to avoid potential language barriers)
  4. Who would we appoint as our Agent or Appointed Representative to deal with the VAT returns that would be required?

At Randall & Payne we are not able to complete European VAT returns, but we are able to offer advice and support to our clients who may be affected to ensure they have peace of mind about the changes.

Rob Case is a specialist in VAT so if you have any questions please contact him on 01242 776000 or email rob.case@randall-payne.co.uk.