In Partnership with SimplyVAT.com

Shipbob and SimplyVAT.com have partnered up to offer you a full VAT solution when entering the EU, UK, and Canadian market. In this guide, we are going to be looking over a few examples to help you better understand which new EU VAT scheme you may need as of the 1st of July 2021.

Although the UK is no longer in the EU, we will also be touching on the VAT requirements when entering the UK market.

Please note if you do not find your case in this guide and you want to find out more, contact SimplyVAT. com!


Why are these new VAT rules being introduced?

In simply terms, the EU have put in place these new rules to help modernise the collection of VAT since the rise of eCommerce over the last few years, making it more fit for purpose by ensuring that non-EU businesses are collecting VAT at the point of sale which in theory, will help level out the playing field for EU businesses.

What are these new EU VAT schemes?

Firstly, it’s important to note that these new schemes are going to be an addition to having a local VAT registration in the EU, if you have triggered a VAT liability such as holding stock for example. There are three scheme that you should be aware of:

IOSS (Import One Stop Shop) which will replace the ‘Low Value Consignment Relief’ of 22 EUR. A new consignment value of 150 EUR will be introduced, this can be used for any distance sales of goods made from third countries into the EU to private individuals. Under IOSS, the VAT is going to be due at the point of sale when the payment has been accepted, and the goods imported under IOSS will have a smoother transition through customs as VAT has already been paid at the point of sale and will be remitted to the Member State of Identification on a Monthly VAT Return and payment. EU Companies will need to register in the country of establishment. Non-EU companies will need an EU based Intermediary to register and comply.

Union-OSS will be extended to cover all types of B2C services from EU businesses, as well as physical goods sold intra-EU cross-border distance sales of made by EU and non-EU businesses alike. The Extension of the scheme goes hand in hand with end of Distance Selling Thresholds and application of the ‘destination principle’ shifting from the VAT collection from the sale departure country to the destination country.

Non-Union-OSS is specifically for non-EU established businesses with no fixed establishment in the EU. Following on from the Mini One Stop Shop Scheme (MOSS), this will also be extended to cover all B2C services (including digital goods and services) taking place within the EU to private individuals for non-EU businesses.


Let’s get started!

Case #1: A USA (or Non-EU) established Merchant, holding stock in the USA. Importing goods into the EU, directly to private customers, selling through a Marketplace (such as Amazon or eBay) and through their own website. All goods are sold with a value less than EUR 150.

Which scheme should this Merchant use? The IOSS (Import One Stop Shop) scheme.

Why the IOSS scheme? Since this Merchant is based outside of the EU and is importing goods with a consignment value less than 150 EUR and selling via a Marketplace, the Marketplace in this scenario will take on the responsibility to collect and remit the VAT to the relevant Tax authorities. You should use the Marketplace’s IOSS number on these parcels.

As for those sales made through their own website, all goods being sold to EU customers will now need to be charged with VAT where the end customer is located. Since the goods are sold through their own platform, the Merchant will become responsible to decide when VAT will be collected. The seller can choose to use the IOSS scheme which would make them liable to collect the VAT at the point of sale and remit the VAT to the Tax authorities for all sales made through their website.

Alternatively, the seller can use the special arrangement for parcel operators or VAT register in each country where they import into.

Note that for any goods imported into the EU over a consignment value of 150EUR, the process will fall back to the standard customs procedures, whereby VAT will be collected during importation, and you will decide on who is responsible to collect and remit the VAT (who becomes the Importer of Record) e.g. You (the Merchant) or the end customer.

Conclusion: This Merchant will need to use TWO different IOSS numbers. One will be given to the Merchant by the Marketplace for marketplace sales. The second will be the Merchants own IOSS number, to support all of the sales made through their own website.

· Non-EU Merchants applying for IOSS will need an Intermediary, which SimplyVAT.com can assist with!

· IOSS is purely for the purpose of remitting VAT to the Tax authorities. No reclaims can happen through the IOSS scheme.

· Please note you cannot use a Marketplaces IOSS number for your own website sales.

Case #2: A US (or Non-EU) established Merchant, dispatching stock from an EU country for onward sale to customers located across the EU, selling through both a Marketplace (such as Amazon or eBay) and through their own website.

Which scheme should this Merchant use? The Union-OSS Scheme.

Why the Union-OSS scheme? Due to the Merchant being non-EU established and holding stock in the EU, the Marketplace in this scenario will take on the responsibility to collect and remit the VAT to the relevant Tax authorities for any sales made on their marketplace.

When selling via their own website, this Merchant will become responsible to collect the VAT at the point of sale and remit to the Tax Authorities for any sales made through their own website.

Since the goods are stored in the EU already, there is no consignment value threshold. The seller will also need a local VAT registration in the country where goods are held.

Conclusion: This Merchant will need to register for the Union-OSS in the country where their goods are dispatched from as well as the local registration in the country where goods are held. The Seller will be responsible to collect VAT on sales from own website. Sales made to the marketplace will be made exempt of VAT to the marketplace and recorded on the local VAT return.

· Note you will also need a local VAT registration wherever you hold stock in the EU to reclaim import VAT and declare any Businesses to Businesses (B2B) sales.

· You cannot use a Marketplaces OSS number for your own website sales.

Case #3: A US (or Non-EU) established Merchant, holding stock in an EU country, selling goods and services to customers located across the EU, selling via their own website.

Which scheme should this Merchant use? The Non-Union OSS and the Union-OSS scheme.

Why the Non- Union OSS and Union-OSS scheme? Because this Merchant is non-EU established and has no fixed establishment (such as a satellite office) within the EU, they can use the Non-Union OSS scheme to report all of their services sold through their own website to EU customers.

As this Merchant is non-EU established and is selling through their own website to EU customers, this Merchant may choose to use the Non-Union OSS scheme in an EU Member State for their distance sales of services.

They can also choose to register for Union-OSS for their sales of physical goods to EU customers. The seller should have a local VAT registration in the country where the goods are dispatched from.

Conclusion: This Merchant has two options they can choose

· Option 1) Register for Non-Union OSS to report their sales of services to EU customers and register for the Union-OSS for their sale of physical goods sold cross-border to EU customers. They would also need to register where they hold stock, where they can re-claim import VAT back as well as report any B2B sales.

· Option 2) Register for VAT in each EU country that they supply the sale of goods and services to EU customers.


Some of you may be thinking, what happens when selling to the UK?

Since the UK left the EU on the 1st of January 2021, these new EU VAT rules do not include the UK. The UK have their own set of VAT rules and regulations. Both set of new rules mimic each other so, we have compiled a couple of cases for you to get a better understanding of how to comply with the new VAT rules in the UK (post-Brexit).

Case #1: A Non-UK established Merchant, holding stock in the USA (or another country). Importing goods into the UK, directly to private customers, selling through a Marketplace (such as Amazon or eBay) and through their own website. All consignments are valued at less than £135.

What is their VAT liability in the UK? Since this Merchant is based outside of the UK and is importing goods in a consignment value less than £135 and selling via a Marketplace, the Marketplace in this scenario will take on the responsibility to collect and remit the VAT to HMRC.

As for those sales made through their own website, since the goods are sold through their own platform, the Merchant will become liable to collect and remit the VAT to the Tax Authorities for all sales made through their website to UK customers. A UK VAT registration will be required.

Note that for any goods imported into the UK over the consignment value of £135 will use the standard customs procedures, whereby you will decide on who is responsible to collect and remit the VAT (who becomes the IOR) e.g. You (the Merchant) or the end customer in the UK.

Conclusion: This Merchant would need to get VAT registered in the UK for their website sales, anything sold through a Marketplace should be accounted for by the Marketplace.

· Local UK VAT & EORI number

Case #2: A Non-UK established Merchant, holding stock in the UK for onward sale to customers located the UK, selling through both a Marketplace (such as Amazon or eBay) and through their own website.

What is your VAT liability in the UK? Holding stock in the UK will trigger a local VAT registration. As for the sale of physical goods through a Marketplace, the Marketplace will take on the responsibly to collect and remit this VAT to HMRC. An exempt of VAT sale made to the marketplace will be declared on the UK VAT return.

Similar to case #1, for those sales made through their own website, since the goods are sold through their own platform, directly to UK customers the Merchant will become liable to collect and remit the VAT to HMRC.

Conclusion: This Merchant would need to get VAT registered in the UK for their website sales, anything sold through a Marketplace should be accounted for by the Marketplace.

· Local UK VAT & EORI number


For more information on the VAT ecommerce package, please take a look at the hub on our website. This is where we'll be sharing lots of useful resources such as articles, videos, FAQS, a jargon buster and more!

EU VAT HUB //Take Our Quiz // Download Our eBook

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