Is Your Business Ready for the New EU VAT Rules?

In October of last year, we released a blog post discussing the upcoming VAT changes in the EU and UK: EU and UK Making Changes to VAT on Parcel Imports – GlobalPost International

The UK and EU are ready to implement their version of a registration-based system that puts more onus on the seller or marketplace to capture VAT and end collections at the door. The EU Regulatory changes will take effect July 1st, 2021. The European Union (EU) will introduce new reforms to the VAT obligations for B2C e-commerce sellers and marketplaces. These changes include:

Launching the One-Stop-Shop EU VAT return

Only for B2C sellers
Non-EU seller should be tax registered in the EU
Non-EU seller should declare and pay all import taxes every month or quarter to be determined

Ending low-value import VAT exemption and new IOSS return

Import taxes will be payable on all goods from 0.00 EUR
Low-Value Consignments = Goods not exceeding 150 EUR

Making marketplaces deemed supplier VAT Now is the time for you to prepare for the changes. Registration for the EU Import One-Stop-Shop (IOSS) opened up on April 1st, 2021. All customers wishing to use the IOSS option for shipments into the EU are urged to register as soon as possible. With the IOSS option, consumers pay applicable duties and tax at checkout (seller control). Non-European companies are required to contract an intermediary to handle their monthly VAT declaration. And sellers (or marketplaces) are required to register for the IOSS and remit collected VAT through the IOSS system for shipments under 150 EUR.

By registering with the IOSS, sellers will see the following benefits:

1. Reduced processing times at customs
2. Reduced final mile delays
3. Reduced requests for additional info (recipient email/number/customs information)
4. Reduction in fees
5. Reduction in abandoned packages

Sellers will also have access to the Duties At Place (DAP) option as an alternative to the IOSS:

1. Reduction in threshold from 22 EUR to $.01
2. Applicable duties and taxes will be charged to the consumer upon deliveryCollection fee will range from 5-25 EUR and dependent on the final mile carrier
  -Delivery is dependent on the collection fee and VAT being paid by the recipient
3. Recommended: Accurate descriptions, values, recipient email and phone number, as well as HS codes, will reduce the time for customs to process applicable
4. duties and taxes
5. Recommended: Sellers should clearly disclose to EU consumers their responsibility for VAT collection

United Kingdom VAT Change Reminder The UK has already begun its new plan on VAT (value-added tax) on all goods that will be imported from outside the UK back on January 1, 2021. VAT tax changes included all goods that are imported from Great Britain, England, Scotland, and Wales with value not exceeding £135 ($173 USD). Under the new UK model, it will treat all goods from the European Union and non-EU countries the same way.

To create a UK Government Gateway Account and Register for VAT, go to the HMRC login page by clicking the following link: HMRC services: sign in or register

New Requirements for HTS Reminder HTC codes will be required for all goods that are shipped internationally starting July 1, 2021. Many custom agencies over the world have begun to enforce the requirement. GlobalPost wants to remind all customers to include the HTS code on future shipments. We encourage you to use our new tool for your international shipments. Our new Harmonized System (HS) code lookup tool is free to use and generates approved HS codes for any product using the World Customs Organization schedule. HS Code Lookup Tool – GlobalPost International