Brexit Guides - B2C supplies to customers in the EU after 1 January 2021

During the period up to 31 December 2020, while the UK is still a member of the EU customs union, single market and VAT area, where goods are sent from the UK to consumer customers in the EU, the seller is able to account for VAT either through a UK VAT registration or through distance selling registrations in the EU member states where the customers are located.

From 1 January 2021 this will no longer be possible. From 1 July 2021 the EU will introduce two special VAT accounting schemes which will address this issue and further detail on these is set out below.

From 1 January 2021

Between 1 January and 1 July 2021 however, goods sent from the UK to consumer customers in the EU can be zero-rated for UK VAT as exports, but will be subject to import VAT on arrival in the EU member state where the customer belongs. This may mean that the customer will need to make arrangements to pay the import VAT before they can take delivery of the goods, which may not a favourable outcome for an online retailer as it may discourage the customer from ordering again from the same website.

Until new arrangements start on 1 July 2021 there are therefore two alternatives which UK based online retailers may want to consider in respect of sales of stock situated in the UK to EU customers:

• Discuss whether their carriers are prepared to manage the importation into the EU of packages for EU consumers and potentially pay the import VAT on their behalf so that deliveries can be made after payment of the import VAT.
• Consider holding stock within the EU for the fulfilment of orders from EU consumer customers. This will require an EU VAT registration in the member state where the stock is located and potential distance selling registrations in other EU member states depending on the volume of sales. 

From 1 July 2021

From this date the EU is planning to introduce a number of measures to assist ecommerce throughout the EU. This includes the introduction of two “one stop shops” to make it easier for taxpayers who have liabilities in respect of retail sales in a number of member states to account for that VAT without requiring multiple VAT registrations. This also addresses the problem with import VAT where goods are set into the EU to consumer customers.

One stop shop (OSS)

For businesses which sell stock held in the EU to consumers the one stop shop will allow them to use a VAT registration in a single member state to file a VAT return declaring and paying output VAT at the appropriate rates on sales to consumers in all 27 member states.

Import one stop shop (IOSS)

For businesses selling stock from outside the EU to EU consumer customers, the IOSS will allow them to declare and pay output VAT on sales to consumer customers in all 27 member states.

Further information

If you would like help and advice with VAT on imports or exports, please contact a member of our VAT team, and check out our International Advisory Knowledge Hub.