28th September 2021New EU-commerce package for non-EU businesses – what do you need to know?

The EU introduced its e-commerce package on 01 July, including a new IOSS Registration for non-EU businesses.

Who is affected?

The IOSS allows non-EU businesses (i.e. UK businesses) to register for VAT in one EU country and account for VAT on all B2C transactions, with a value of less than 150 Euros, on one monthly pan-EU VAT Return.

At the same time, any goods with an IOSS number and a value of less than 150 Euros will not be subject to any Import VAT or Duty when they enter the EU.  Any B2B transactions, or B2C transactions with a value in excess of 150 Euros, must be accounted for using the existing rules.

IOSS Registration is available in all 27 EU Countries, but please note the following:

1. You cannot register directly with the local VAT authorities- you have to appoint a local intermediary; and
2. That intermediary becomes jointly and severally liable for your EU VAT debts.

As a result of the points above, an IOSS Registration will be more expensive than some small businesses may have hoped.

IOSS is not mandatory, and a UK business can continue to use the existing rules and pay Import VAT when the goods enter the EU, but we would recommend it if the value of your clients B2C sales justifies the compliance costs.

If you would like to discuss specific circumstances or if you have any questions, please get in touch.