The 1st July 2021 VAT changes in the UK and EU significantly impact e-commerce sellers.
The EU’s e-commerce package introduced changes to the movement of goods from Northern Ireland to the EU and the rest of the UK to the EU back on 1st July 2021. But many e-commerce sellers are still working to ascertain where they now need to be registered, where they can store their goods, and what VAT programmes are best for them, including the new EU’s One-Stop Shop (OSS) and the Import One-Stop Shop (IOSS) VAT programmes.
Note, if you’re selling in the UK (England, Wales, Scotland and Northern Ireland) and storing your goods at Amazon, a 3PL provider or warehouse you’ll need to be VAT registered in the UK.
For those sellers who used to fulfil orders from the UK and ship to the EU member states, that has now changed.
If you plan to sell in the EU you’ll need to be registered in any EU member state you store your goods, then be registered for the EU’s new One-Stop Shop VAT programme to cover all other sales in the EU.
For example, Jane sells shoe inserts in the UK. She stores her product at a warehouse in the UK and sends products to Amazon FBA to have to have Amazon fulfil her orders. Jane will need to be VAT registered in the UK if her VAT taxable turnover goes to the £85,000 threshold (or she knows it will), or if she is a non-established taxable person.
Jane also wants to sell her inserts in France, Germany, Italy and Spain. Jane used to fulfil her orders from the UK, but due to Brexit, and changes to the EU VAT programme, she can no longer do that.
Further, new rules prevent Jane from sending product direct to Amazon in the EU, but must first be shipped and stored in an EU warehouse or facility.
There is some good news for Jane. She can find a single warehouse in let’s say Germany and store all her shoe inserts there. As she’s storing her goods in Germany she’ll need to be VAT registered in that country. Much like she used to do in the UK, Jane can now fulfil orders from Germany, to France, Italy, Spain or any other EU member state through her own 3PL German provider and/or Amazon FBA Germany. Jane will need to register for the EU’s One-Stop Shop VAT programme that will then cover all VAT obligations throughout all EU member states in which she sells her shoe inserts.
Jane is just one example, of how e-commerce sellers are affected and must adapt to make sure sales continue while ensuring they meet all required VAT obligations.
If you would like to learn more about UK/EU VAT obligations for the e-commerce seller, contact our VAT experts on +44 (0) 208-004-1160 in the UK, ++1 (714) 782-7000 in the USA or simply email us at query@MyVATdirect.com.
About My VAT Direct Ltd
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