The Brexit EU-UK Trade and Cooperation Agreement includes a Protocol on cooperation and combating VAT, customs and excise fraud, plus mutual assistance between the EU and UK on recovering tax claims. This creates a framework between the UK and EU27 member states to assist each other in compliance with VAT legislation and protecting VAT revenues and recovering tax and duties on each other's behalf. (if you need help and support complying with EU VAT requirements, see the services offered by Avalara.)

UK companies selling into the EU

If UK Sellers want to keep selling to customers in any EU state from stocks in the UK, they must VAT register in each target country immediately. Failure to do so will trigger immediate liabilities to fines. The EU customs authorities will also challenge you as to why you are not supplying them with an EU VAT number when you are importing goods. An alternative is to move a proportion of UK-held stocks to somewhere in the EU and sell on a distance selling-basis from there. Furthermore, UK businesses with an EU VAT registration will also need a Fiscal Rep in up to 19 of the EU 27 countries*. These requirements have resulted in smaller traders no longer exporting to the EU.

From 1 July 2021, all commercial goods imported into the EU from a third country or third territory is subject to VAT irrespective of their value. For the EU's requirements on VAT - see EU-UK: A new relationship.

EU companies selling into the UK

EU sellers using their local VAT numbers to sell to UK customers, now have to apply for a UK VAT registration number immediately or risk incurring UK fines and penalties. This – and the additional shipping costs – has resulted in some EU sellers now refusing to sell to UK customers.

For HMRC's policy on VAT on EU trade - see HMRC's Changes to VAT treatment of overseas goods sold to customers from 1 January 2021.

Import One-Stop Shops (IOSS)

The Import One-Stop Shop (IOSS) is the electronic portal businesses can use since 1 July 2021 to comply with their VAT e-commerce obligations on distance sales of imported goods. The IOSS allows suppliers and electronic interfaces selling imported goods to buyers in the EU to collect, declare and pay the VAT to the tax authorities, instead of making the buyer pay the VAT at the moment the goods are imported into the EU as it was previously the case.

This system facilitates and simplifies the declaration and payment of VAT for goods sold from a distance by sellers from non-EU countries or territories. Furthermore, VAT payment is applicable only to purchases made by a buyer within the EU and for goods valued at less than EUR 150.

If you would like to take advantage of the benefits of the IOSS Scheme, but need assistance in its implementation and management, then why not consider Avalara's IOSS service? This service offers:

  • You get the all-important IOSS number you need for all carriers within 7 days.
  • With just a single registration needed to trade with all 27 EU members, you’ll greatly reduce your reporting requirements and free up time for selling.
  • Managing monthly returns will be a breeze with an easy-to-use portal
  • Avalara will be your expert intermediary, wherever needed, and handle the filing and payment of VAT to tax offices on your behalf.

You can get started with IOSS in three easy steps:

  1. Register with Avalara to receive your unique IOSS identification number to put on all packages under Euro 150** sent to the EU.
  2. Calculate VAT at checkout. (The invoice needs to be submitted with the package at customs)
  3. File your returns (on a monthly basis).

or if you would like further information contact James Bright directly for a no obligation chat.

Avalara’s IOSS service is backed by the world’s most powerful tax engine. It’s the most comprehensive compliance tool on the market:

  • Covers all 27 EU members.
  • Helps digital services, not just ecommerce sellers.
  • Offers the best shipping option available.
  • Provides a named contact for customers, and never offloads to third parties.
  • Helps with HS Codes, cross-border customs duties, and Trade Restrictions Management.

*Fiscal representatives for processing VAT or GST are not required for EU countries alone but also Norway, Switzerland, Iceland, Japan, South Africa, Australia and South Korea. – More can be expected to be added to that list - again Avalara can help to make sure that you are tax compliant in all these countries.

**VAT is now due on all goods shipped into the EU but once the value of goods are above €150 there could also be duties that would be applicable on top of the VAT. There are many things, like the origin of goods, that could affect whether duty is required to be paid.