Get ready for EU eCommerce VAT changes from July 2021

2019-10-03

Written by Starshipit

If you are a business owner selling goods online to customers in Europe, there are important VAT changes from July 2021 that will require your attention. These reforms were delayed by the European Commission at the beginning of the year during the Brexit negotiations and due to the COVID-19 pandemic, but this extended deadline ends in July 2021.

VAT requirements today

Currently, online sellers who sell to customers in Europe can ship goods valued at less than €22, VAT-free, but from July all imports in the EU will be subject to VAT.

VAT requirements from 1st July 2021

Sellers must collect VAT on behalf of the buyer at the rate for their EU country of residence. This VAT amount must be displayed at checkout on the eCommerce platform.

I have an eCommerce store and am based outside of the EU, what do I need to do?

If you are based outside of the EU you will need to register in the Import one stop shop (IOSS) portal.
The Import One-Stop-Shop (IOSS) is to be used by online sellers to report VAT charges collected when importing goods to the EU valued at less than €150 (total value). For goods valued at €150 or more, the buyer will be taxed directly upon entry in the EU member state. 

Retailers only need register for IOSS in one EU member state, so no need to register for a VAT number in all 27 EU member states.

After registering you will be issued a unique IOSS number, which must be listed and displayed on all consignments sent to the EU.

*The IOSS will become open and available closer to the July deadline more information available at IOSS website.

How to update your Starshipit account with your unique IOSS number

From the 1st July you will need to ensure your IOSS number is on each consignment going to the EU, to add your IOSS number log into your Starshipit account and update your details, using this article as a guide.

How to update your Starshipit account with your VAT number for DHL Express

Log into your Starshipit account and update your details, using this article as a guide.

I have an eCommerce store and am based within the EU, what do I need to do?

If you are based within the EU when shipping between EU countries you will need to register in the OSS portal.

The Union One-Stop Shop (OSS), also referred to as Mini One-Stop Shop, must be used from July 2021 to comply with VAT obligations on eCommerce sales within the EU. 

The OSS works like the IOSS. All you need to do is register in your own EU member state. Currently, online retailers in the EU selling to other EU member states need to register and pay VAT in the buyers’ Member State. The threshold amount is changing.

*From 1 July 2021 a new EU-wide threshold of €10 000 will apply.
  • Sales below €10 000
    Continue to apply the domestic rules for VAT on your intra-EU
  • Sales above €10 000
    You are liable for VAT in the buyer’s Member State. For amounts above this threshold, businesses can easily register on OSS to declare and pay VAT.

*The OSS will become open and available closer to the July deadline more information available at OSS website.

How to update your Starshipit account with your VAT number for DHL Express

Log into your Starshipit account and update your details, using this article as a guide.

How to collect VAT from customers

Now that you know what the changes are, it’s time for you to update your online store. You must ensure that you display the correct EU member state’s VAT rate to the buyer at checkout or beforehand, as VAT is now collected at point of payment.

The following rules now apply to online retailers.

1) NON EU online retailers
For orders up to the value of €150 you need to collect VAT, no need collect VAT if over €150.

2) EU online retailers
You need to charge the buyer’s EU member state’s VAT rate when you exceed the EU-wide threshold of €10,000 in a tax year.

There are other considerations when shipping cross border such as HS Codes, EORI numbers, and more, read more about about the requirements for eCommerce when shipping internationally to the EU/UK

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Starshipit

Starshipit

Starshipit is the best practice shipping and fulfilment platform that helps retailers save time and deliver great shipping experiences.

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