EU VAT Changes for 2021

Posted on June 24, 2021

Starting July 1, 2021, the European Union (EU) is changing its Value-Added Tax (VAT) rules. The prevalent changes will mostly impact online business to customer sales. These changes should simplify the import process for items purchased online.

The changes are as follows:

Low Value Exemptions:

Previously, buyers in the EU were exempt from paying VAT on items with a value below €22. Moving forward, VAT will be required on all purchases. Merchants can decide to collect VAT on orders below €150 to simplify the buying and shipping experience for their customers. If merchants choose not to collect VAT on exports to the EU below €150, customers will be charged upon delivery of the goods by the carrier.

IOSS

The introduction of an Import One-Stop Shop (IOSS) filing will allow vendors that collect VAT on orders below €150 to file a single monthly VAT return for all low value exports to the EU. Non-EU merchants may have to appoint a VAT intermediary to use IOSS. IOSS VAT numbers should be included on commercia invoices, so carriers don’t attempt to collect VAT from the buyer.

Deemed Suppliers

Another change introduces the concept of Deemed Suppliers. In many cases, in online sales, the online platform being used (think Amazon or Etsy) brings the actual seller in touch with the buyer, with the platform facilitating the sale by the actual supplier. In such cases, the platform will be the Deemed Supplier, and will be responsible for charging and reporting VAT. In addition to the above changes, it is expected that there will be an increased focus on regulatory compliance regarding these matters. One area for sellers to focus is ensuring that commercial invoices correctly list out any charges (goods, tax, transportation, insurance). This will go a long way toward ensuring VAT is properly paid, as certain items (transportation, insurance) are excluded from VAT unless they are rolled up into the cost of the goods.

If you would like additional information how these new regulations may impact you as seller or a buyer, please contact Allyn at sales@allynintl.com.

Contributor: Matthew Dreckman


About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China, Prague, Czech Republic, and Dubai, U.A.E. For more information, visit www.allynintl.com.