The Irish Revenue recently issued guidance reminding businesses and consumers that, from July 1, 2021, new value-added tax rules are being introduced for goods arriving into Ireland from non-European Union (EU) countries.
The new VAT rules are part of the EU’s 2021 e-commerce VAT reform package and will apply in all member states from July 1, 2021. According to the European Commission, the changes are intended to make life easier for businesses that sell goods online, level the tax and regulatory playing field between EU and non-EU businesses, and tackle VAT fraud.
Imports of goods
Under the changes, from July 1, 2021, the existing VAT exemption for imported goods with a value of EUR22 or less will cease. From that date, all goods arriving into Ireland from non-EU countries, regardless of their value, will be subject to VAT at the applicable Irish rate (23 percent, 13.5 percent, or nine percent).
The new VAT rules will also apply to goods purchased from a non-EU country in advance of July 1, 2021, that subsequently arrive in Ireland for delivery on or after that date.
An optional scheme, known as the Import One Stop Shop or IOSS, will be introduced covering distance sales of goods imported from third countries or territories to customers in the EU in consignments up to a value of €150. The scheme allows suppliers importing goods into the EU to declare and pay the VAT due on those goods by submission of a monthly return via the IOSS in the Member State where they have registered for the scheme. This removes the need to deal with VAT compliance obligations in other EU countries.
Intra-EU B2C supplies and service imports
The EU e-commerce VAT package also includes several other significant changes to EU VAT rules that apply from 1 July 2021.
As part of the EU’s shift from an “origin-based” to a “destination-based” VAT regime, EU providers will be required to charge VAT on all types of cross-border services to consumers and on intra-EU distance sales of goods according to the VAT rules in place in the country where the buyer is located, though sales below a value of EUR 10,000 can be accounted for under domestic rules.
Non-EU sellers will also be required to charge VAT on certain cross-border sales of services to EU consumers and remit that VAT to the tax authority in the country where the consumer is located.
To help business comply with these changes, the EU has developed a new One Stop Shop (OSS), an expansion of the existing Mini One Stop Shop system that was introduced in 2015 to deal with supplies of certain services.
Traders who opt to use the OSS scheme can deal with all EU VAT due on applicable supplies by registering in one EU country rather than in every EU country where they have customers.
An OSS “non-Union” scheme will cover all B2C services supplied by non-EU suppliers to customers in the EU. EU established suppliers can use the OSS “Union” scheme to report all B2C services supplied to customers in the EU and to declare VAT due on intra-EU distance sales of goods. Suppliers established outside of the EU can also use the Union scheme to declare and pay VAT due on intra-EU distance sales of goods.
Finally, online marketplaces and platforms facilitating supplies of goods in the EU will be responsible for accounting for the VAT on those supplies. The online marketplace or platform can therefore opt to register to apply for the OSS or the IOSS or both, depending on the supplies they are making.