Day 1 of EU VAT Rules Changes Summarised

The EU VAT rules changes came into effect today, the 1st of July 2021, so what’s it all about. What’s changed and why are the rules changing?

There are two main aims from the EU VAT rules changes. First to collect more VAT and second to make it less onerous for both EU and non-EU companies to do business.

1. EU VAT Rules changes to collect more VAT

   Collecting more VAT is simple. Up until now there have been too many loop holes with parcels entering the EU with no VAT collected or with values underdeclared and thus less VAT that should have been applied. It’s also very difficult to ensure that overseas sellers collect and remit VAT. So, marketplaces will now collect VAT on all sales to EU customers.

   You might quite correctly say that the system is still full of holes and won’t work. No one can argue that if an EU consumer buys from a non-EU website VAT might not be paid. However marketplace sales are a massive chunk of VAT that will now be collected at the point of sale and collecting this chunk of VAT is an improvement on not collecting it. Don’t expect EU VAT rules changes to stop here though, as soon as the marketplace VAT settles down into an established collection routine the EU will be looking at the next chunk of unpaid VAT and how to collect it.

   Don’t forget this is exactly what happened in the UK on the 1st of January. The EU are doing nothing that the UK hasn’t already done!

2. EU VAT to make accounting easier

   The second aim of the EU was to introduce OSS – a single VAT account in one country to enable EU companies to complete one VAT return for all the EU countries they sell to. For anyone outside the EU, their is the IOSS which again enables you to sell to the whole of the EU with a single VAT account. Indeed, if up until now you’ve registered for VAT in multiple EU countries you may be able to deregister in all countries bar one and submit IOSS VAT returns moving forward and that should save you time and money.

   De Minimis

   Also from today, the €22 VAT threshold (De Minimis) exemption on goods imported to the EU will no longer apply. This means that ALL EU commercial imports will be subject to VAT regardless of value.

Find out how IOSS works with a free virtual GFS warehouse tour

Still unsure what this means for your business? Don’t worry, our friends at GFS can help. Whether you’ve already registered for the IOSS or not, they can advise what to do next and make sure you’ve got the best possible delivery solution in place so can continue shipping to the EU without disruption.

GFS are also offering a Virtual GFS Warehouse Tour which is available for free. This is an opportunity to see absolute best practice in a busy warehouse and get some insights as to how you could streamline your own business. You’ll get to see inside GFS’ own warehouse where they are busy fulfilling orders for their retailer customer and not only look at the physical layout and processes but also the best in class technology that makes it all run effortlessly.

You’ll discover that much of the technology is not focused on the pick/pack/ship warehouse functions that you might expect, but goes way up the sales funnel to the point of purchase where automatically selecting carriers, disclosing customs duty and taxes up front to customers and collecting them up front or transparently informing customers what they can expect to pay when their purchase is delivered is all a part of the process. If you want to find out how to handle the new EU VAT rules changes, book yourself on a tour to see how best practise can make the regulations easier to handle and streamlined for your business.

If you’ve never visited a large warehouse operation (or if you run a massive warehouse and would like some expert insights into how you can streamline your logistics), sign up for the Virtual GFS Warehouse Tour – it’s totally free and there’s also a special offer. If you decide at the end of your tour that you want to take advantage of some of the technology on offer from GFS, after your Virtual GFS Warehouse Tour you’ll pay no integration fees when you implement the new technology.

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