Originally written by Dan Matthews on Small Business
On 1 July, the European Union will change the way in which VAT is reported and paid, potentially impacting anyone in the UK operating a business selling products & services online to consumers and practicing distance selling.
“The Covid-19 pandemic has caused a big shift in working patterns and, as a result, a lot of people have out of necessity or opportunity taken to start up an e-commerce business or switch to digital selling,”
“The change to EU VAT reporting will help. It’s designed to simplify tax reporting, promote ecommerce and increase online cross-border transactions. It will support small business and remove barriers in a post-Brexit environment.” says Asif Chaudhry, Director, Product Marketing at Sage.
What will change?
The changes are that for sales to consumers (basically anyone without a VAT registration) the VAT is charged based on which country the customer is in, not the country of the seller. Prior to this date there were thresholds, and businesses selling below these thresholds could charge their home VAT rates which avoided needing to know many different VAT rates.
Alongside this change the EU is expanding their one stop shop (OSS) simplifications which optionally allow businesses outside of the