We know from our interactions with many clients that there are still a number of VAT and import/ export issues that are causing problems post-Brexit.
As of 1st July 2021, the EU has introduced two schemes that they believe will assist with some of the VAT compliance and import problems.
The Import One Stop Shop, or IOSS, scheme aims to simplify importing goods (up to a consignment value of €150) into the Union for businesses located outside the 27 Member States.
There is also a similar scheme (OSS) for non-EU suppliers of services to consumers in the EU. This is being extended from the MOSS scheme (which you may have registered under if you provided electronically supplied services whilst we were in the EU). The OSS now covers all services supplied by UK businesses to EU consumers.
Both schemes mean that rather than having to register for VAT in each member state into which you sell goods/ supply services, IOSS and OSS allow you to obtain a single registration through which you undertake EU wide VAT compliance.
Additionally, in respect of goods, it means your EU customers do not need to pay import VAT when the goods are landed at the port in their country, which will solve some of the customer service issues that you may have experienced in the past months since Brexit took effect.
Once registered, you will need to charge VAT at the rate local to your customer and pay it over to the local tax authority. This is done through the filing of a single return in the nominated member state in which you are registered, with the tax authority there handling the administration of passing across the VAT collected on the sales.
You are free to choose which EU member state you wish to register with, but some countries may require a local representative if they do not recognise the mutual assistance clause of the UK-EU trade agreement. This is likely to mean you would incur extra costs in those member states.
If you think the scheme would be of use to you or have questions about how it may work, please call or contact your usual TC adviser who can direct you to one of our Indirect Taxes Team.