Sage 50cloud Accounts update: V 27.2

New EU E-commerce rules due to come into place as of July 1st

From 1 July 2021 new EU e-commerce rules will come to place. In the article below we have covered what you need to know and what this might mean for your business. It should be noted that these schemes are not mandatory and rules have been introduced to ease the process for those selling to consumers across the EU.

What are the new rules?

As of 1 July 2021, the EU are going to be introducing two new VAT simplifications for sales to EU consumers (customers who are not VAT registered):

• The One Stop Shop    

• The Import One Stop Shop  

These new schemes that are being introduced are optional but will allow sellers to report and pay all EU VAT on sales to EU consumers through a single return instead of having to register for and pay VAT in each country they sell to.

What are the new schemes?

The One Stop Shop (OSS) 

The OSS, which is an expansion of the existing MOSS scheme, can be used to report and pay EU VAT in relation to sales of services to EU consumers which attract VAT in the country of the customer (destination VAT).  The OSS can also be used to report and pay EU VAT in relation to intra-community distance sales of goods which are still relevant for businesses residing in Northern Ireland with an ‘XI’ VAT registration. Alongside the introduction of the OSS, the EU will also abolish distance selling thresholds from 1 July 2021 and replace them with a single EU wide €10,000 (£8,818) threshold. 

The Import One Stop Shop

The IOSS has been designed to simplify the process of exporting goods to EU consumers and is available for consignments of €150 (£135) or less. When the IOSS is used, the seller will need to charge destination VAT at point of sale. This will mean the goods no longer attract import VAT upon arrival into the EU, thus simplifying the experience for the end customer.

What kind of VAT are these new schemes subject to?

Any transactions reported through both schemes are subject to Destination VAT. Instead of charging VAT at the UK rate (or home rate), the seller charges VAT at the rate where the customer resides. For example, if a UK business sells goods to a customer in France, French VAT is charged at the rate applicable in France.

Do Sage50cloud Accounts and Sage Business Cloud Accounting support this?

From 1 July 2021 both Sage 50cloud Accounts and Sage Business Cloud Accounting will support the ability to charge destination VAT when selling to EU consumers and will allow users to prepare reports to aid them with the filing of OSS and IOSS returns.

Sage 50cloud Accounts now has software available (version 27.2) for you to install to help with the introduction of the new legislation. For tips and help with upgrading you can register for the Sage50cloud installation webinar or visit Sage 50cloud Accounts Help Centre. For more information on installing the updates please get in touch. 

How do you register?

If your client sells to the EU and wishes to use OSS and/or IOSS, they will need to register for the schemes either in an EU member state or potentially in the UK depending on their location and scheme to be used. For the IOSS, your clients (as a seller) may also need to appoint an intermediary to register. 

For further details on the new rules, visit:

–       European Commission guidance on the One Stop Shop Schemes

–       European Commission guide to VAT for e-commerce

–       HMRC guidance on the One Stop Shop schemes

–       Overview of EU VAT changes

30/06/2021

“Any advice relating to accounts or tax should be sought from your tax accountant. Sage Accounts Solutions Limited will not be held responsible for any loss or damage caused as a result of the information contained herein.”

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