New VAT rules for EU retail sales

The EU has extended its mini one stop shop (MOSS) to become a one stop shop (OSS) from 1 July 2021 covering a wider range of supplies.

UK retailers can still register

The OSS simplifies and minimises VAT registration requirements for distance sales of goods to consumers. Only one VAT return is required for all sales within the EU, but the seller should apply the VAT rate for each state where goods are sold. A UK business can make use of the OSS system by registering as a non-Union VAT payer in one EU member state.

However for businesses that sell only a small amount of goods to the EU, the new arrangement may prove more burdensome. The previous simplified scheme allowed retailers to include sales to the EU on their UK VAT return.

VAT e-commerce package

The new rules are commonly described as the EU VAT e-commerce package. It consists of two key components: the OSS and the import one stop shop (IOSS). Both are optional and are restricted to online sales of goods and services to consumers in the EU.

  • OSS: UK businesses that sign up to OSS must charge the VAT rate of the destination country at the point of sale and report and pay quarterly through an online portal.
  • IOSS: The IOSS is used for online sales of goods imported into the EU from a third country. It can only be used for consignments worth up to €150 (£130). As with the OSS, the seller charges the VAT rate of the destination country at the point of sale but reports and pays it monthly. Using IOSS means goods travel through customs faster, and the customer does not face additional costs after sale.

Businesses that sell to EU consumers through an online marketplace, such as Amazon or eBay, may no longer need to account for VAT themselves because the marketplace will in certain cases become the deemed supplier and deal with the VAT itself. You should consult the marketplace about how to proceed.