So, you may (or may not) have heard that you will need an EU VAT number in order to continue to send your e-commerce shipments into the EU from the 1st of July 2021 . There’s no escape or hiding in a dark hole, so you need to get sorted for it. An online search returning pages and pages of confusing information can give you that nervy feeling pretty quickly until of course, you found this.
Keep calm! - It's all actually pretty easy once you get your head around it.
That's why we've created this jargon-free and simple guide on what you need to know about EU VAT registration before 1st July 2021 and getting an IOSS ID. We’ve ignored what you don't need to know; we’ve left that to the accountants. We’ll make you more prepared than Bear Grylls at scout camp.
1. Why are the EU doing this?
To prevent fraud and also (obviously) to generate more tax income for the EU. That's it in a nutshell.
2. Does it affect me?
Send e-com sales into the EU? Then yes it does, so you need to read on, but it’s not too bad really.
3. Which shipments does it affect?
Pretty much everything you're sending into the EU B2C that is valued from €0 to €150. The "no VAT applied to shipments valued under €22" thing is being thrown out the window.
4. What do I need to do before 1st of July 2021?
Register for VAT and an IOSS ID in one European country. That's right, you only need one VAT number, not a VAT number in every EU country like you may have heard, so stop panicking. It’s up to you where you want to register. How about one in the Netherlands? - they seem nice. You could try this link, and it's in English - bonus: https://business.gov.nl/regulation/vat-businesses-outside-netherlands/
5. What's an IOSS ID?
It stands for ‘Import One Stop Shop’. It means that you can clear all your parcels into the EU through one EU VAT number, even though your parcels are going all over the EU. It just makes it a lot less of a hassle than having an EU VAT number in every EU country, perish the thought.
6. Where do I get an IOSS ID?
You’ll be able to get one from the country where you registered for your EU VAT number. You can't register until the 1st of April 2021. We will update this article when we find where you can register so watch this space! The information around this is all a bit sketchy at the moment.
7. When do I need to charge EU VAT?
You need to capture the appropriate EU VAT due in the EU country where your buyer is residing during the checkout process (just like you do with UK VAT). Easiest way to do this is by applying the appropriate country VAT rate once you've captured your buyer’s delivery address (and country obvs!).
8. How do I make sure that my EU VAT number and IOSS ID is used by EU customs?
When you export into the EU, you’ll need to include your new EU VAT number and IOSS ID on the clearance information you normally provide. Obviously if you're using Samos e-commerce European Parcel Services (click here for more details!), we will help you make sure that you’re compliant. Most of you will provide this data electronically when the parcels are shipped.
9. What do I need to do with my shiny new EU VAT number?
Strangely, it is a lot easier than the current system of sending DDP etc. It’s pretty much like doing an HMRC quarterly VAT return, except you’ll be doing it on your new EU VAT number on the website of the country it’s registered in. Once you’re all set up properly, they’ll know how much EU VAT you have to pay, based on your EU sales and EU VAT you charged. Remember, you have already charged and banked the EU VAT that is due at checkout (see point 6 if you can’t remember that bit already), so don’t spend it on flashy foreign holidays. Just like you shouldn’t spend the HMRC VAT that you need to hand over to her maj - save it ready to settle up with the EU, for which you’ll need to do a monthly VAT return – enjoy that won’t you.
10. How come I pay EU VAT in one country when my buyer was in another?
The EU sort that bit out, so don’t worry too much. That’s why it is called Import One Stop Shop. It’s a bit like getting milk, a pair socks and a new barbeque from Tescos.
11. But the value of my EU e-com sale was over €150?
Ah, that bit we don’t know yet. Neither does the EU, so watch this space, because as soon as we do know we’ll update you here.
We think that the 1st July 2021 date will be delayed a bit, but as soon as we know for definite, we'll post it right here.
Is there anything that you’re still not sure of? Feel free to contact us here and we’ll try and help you out. You could also try our buddies at SimplyVAT if you have complex questions. There is also a tonne of more information here if you're feeling keen.
Of course, it’s all a lot easier if you use Samos e-commerce for your parcel shipments into the EU because we’ll help you through all this and make sure that you’re well prepared. Our European parcel service is surcharge free, a 2-5 day delivery time, with full track and trace, PUDO/home delivery options and POD. One simple, uncomplicated price much more akin to what you were paying before Brexit. For a free no-obligation quote, get in touch here. We’re very approachable and would love to hear from you.
The boring but neccessary bit: Although we have imparted all this handy information to you and sincerely hope you find it all very useful, surprisingly enough we're not tax advisors so we always recommend that you seek further tax advice from someone fully qualified to do so.