New VAT rules will come into effect for cross-border business-to-consumer (“B2C”) e-commerce activities carried out within the EU from 1 July 2021. These new VAT rules are significant, wide ranging and complex.
As a very high-level overview, these changes include:
- Distance Sales: Irish businesses making distance sales of goods to certain non-taxable customers in other EU Member States may have to register and charge local VAT in the customer’s EU Member State (subject to an overarching annual €10k threshold). The country specific VAT thresholds for distance sales will be abolished and replaced by an EU-wide €10k sales threshold from distance sales and certain B2C services.
- One Stop Shop (“OSS”): The current Mini One Stop Shop is being extended to the One Stop Shop (“OSS”) to include distance sales and other services supplied to non-taxable customers in an EU Member State where the seller is not established. This means that the Irish e-seller can opt register for the OSS to avoid multiple VAT registrations across the EU. Where OSS is used, the Irish e-seller can report and remit VAT due on distance sales and certain services to non-taxable customers in other EU Member States under a quarterly OSS VAT return. The OSS registration portal is now open on ROS.
- VAT exemption for imported small consignments: The current VAT exemption for goods imported from outside the EU in small consignments of a value of up to €22 will be abolished in order to help create a level playing field for goods sourced within the EU. From this date, all goods imported into the EU will be subject to VAT. The customs duty exemption for goods of up to an intrinsic value of €150 which are imported into the EU will not change.
- Import One Stop Shop (“IOSS”): A new Import One Stop Shop (“IOSS”) will be introduced to simplify the importation of goods in consignments that do not exceed an intrinsic value of €150 (excluding goods that are subject to excise duty). The IOSS allows suppliers importing goods into the EU to declare and pay the VAT due on those goods by submission of a monthly return via the IOSS in the Member State where they have registered for the scheme. Where the IOSS is used, the supplier will charge VAT to the customer at the time of the supply and the goods will not be subject to VAT at the time of importation. The IOSS can be used by both Non-EU and EU established suppliers. The IOSS registration portal is now open on ROS.
- Platforms: Businesses operating e-marketplaces and platforms may be required to collect and pay the VAT on certain sales on their marketplace/platform.
It is important that Irish businesses are aware of the impact of these new VAT rules on their activities and consider what actions (if any) are required to adapt to these changes, which could include pricing adjustments, IT system changes and internal process updates.
Please contact us today using the form below to discuss how these changes may impact your business and how Gilroy Gannon tax team can assist.