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As of 1st July 2021, the EU is changing the rules on VAT for businesses outside of the EU, who sell any product or service when selling any product or service. The new way to pay VAT as a non-EU member state business is called the One-Stop-Shop (OSS).

 

In this blog post, we’ll discuss the rules around paying VAT as a non-EU member state business that sells products and services in the EU and the new rules that surround paying VAT as a non-EU member business that trades in the EU, without a fixed address, as well as what impacts these changes will have.

 

The OSS aims to simplify how non-EU member state businesses, who sell to consumers within the EU, pay VAT. The change was originally planned to take place on the 1st of January but was postponed due to COVID-19.

 

The new OSS is essentially an extension of the existing Mini One-Stop-Shop (MOSS) which was introduced in 2015 as a way of non-EU member states paying VAT when selling digital services in the EU.

 

Rules around paying VAT before 1st July 2021

 

  • Abide by the distance selling threshold – this is when businesses outside the EU need to register in various EU member states that they sell to and pay VAT when their turnover reaches a certain amount depending on the country.
  • Use the MOSS when supplying digital services to EU member states.
  • Selling physical Products over £15 need to register for VAT in each EU member state that the products are sold in.

 

Rules around paying VAT after 1st July 2021

 

  • Extending the MOSS to cover all services and goods sold by businesses outside the EU to consumers within the EU eliminates the need for multiple VAT registrations.
  • Implementing a general selling threshold of 10,000 euro and no longer using the distance selling threshold which changes depending on the country.
  • Of goods sold to EU consumers up to a value of £135, if the seller declares and pays the VAT at the time of sale using the OSS, they will be exempt from VAT.

 

Impacts these changes will have on UK businesses

 

  • Does not apply to businesses who have a fixed address in the EU
  • No need to register for VAT in multiple countries
  • Register as a ‘non-union taxpayer on the OSS returns to make quarterly payments of VAT
  • The EU estimates this can cost up to £6,900 a year

 

To get more information on the OSS, you can visit the government’s website here