If you sell to consumers in Europe, you have probably already come across the new VAT rules operating from 1 July 2021.
Who pays the VAT?
In a nutshell, if you sell to a non business customer in the EU, someone has to pay the VAT (or IVA) in the EU country where the customer lives. The previous minimum of €22 has gone. Instead, for items with a value of up to €150, either the customer receiving the goods must pay the relevant VAT, or you must use the IOSS (Import One Stop Shop) system.
From a commercial point of view, expecting the end customer to arrange to pay the VAT and collect the goods is not conducive to good customer relations. It makes it difficult to give a fixed price – and is not going to encourage repeat sales.
Stopping EU sales
Already, some businesses with reasonable sales into the EU have just stopped selling there. Bear in mind that for most items, even Northern Ireland is treated as part of the EU, making even selling to NI difficult.
You can register for VAT (or its local equivalent) in any EU country you sell in to. Since there are 26 of them, perhaps not such a practical idea.
The alternative is to use an IOSS.
The principle of an IOSS is that it is a VAT agent established in an EU country which deals with the distribution of VAT to the relevant EU countries. You provide the VAT agent with details of sales and pay the VAT for all of the EU to the agent. The agent ensures that correct reporting and payment is made to every EU country – saving you a whole load of time and aggravation.
One of our team of independent specialists is a VAT agent in Spain – so we can help you deal with all of your EU sales.
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