Continuing our Brexit series, we now turn to subjects relevant to businesses selling goods to consumers belonging in the EU and retailers selling to visitors to the UK.
You may be aware that, currently businesses selling and delivering goods to EU consumers may have to register for VAT in multiple EU member states under the distance selling rules. With effect from 21st January 2021, these rules will no longer apply and all sales to EU consumers will be zero-rated exports.
However, the exported goods will be subject to import VAT on arrival in the EU member state where the customer belongs. As a UK seller of such goods you will want to ensure your EU customers are aware that import VAT will be payable in addition to the sales price and therefore may want to consider the following alternatives to make transactions easier for your EU consumers:
- Manage the importation into the EU of packages for EU consumers using your carriers or transport providers to pay the import VAT on behalf of the customers so that deliveries can be made after payment of the import VAT.
- Hold stock of goods within the EU for the fulfilment of orders from EU retail 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.
With effect from 1st July 2021, the EU is bringing in new arrangements which will allow you to register in just one EU member state under a One-Stop-Shop making one VAT return to account for output VAT at the appropriate rates on sales to consumers in all 27 member states. Hence, you will only need to register via a One-Stop-Shop for all of your exports to consumers across the EU.
Turning now to retail sales made in the UK to visitors from overseas; you may already have seen some of the extensive coverage of the UK Government’s announcement that the Retail Export Scheme (which allowed the zero-rating of sales by shops to non-EU visitors) is being withdrawn with effect from 1st January 2021.
This means that visitors will not be able to take goods with them personally when they leave the UK, however, the goods can still be zero-rated as an export provided the business arranges the transport/delivery of the goods directly to an address outside the UK.
Where goods are being exported by post to an overseas customer and their value is less than £873, a full export declaration is not required; see further details here. Customers will also need to be aware that import VAT may be due on arrival in the country of destination.
Our next update will focus on the supply of cross border services to businesses and consumers.
You can read our previous editions here.