COVID-19: UK & EU VAT Changes

Governments throughout Europe are trying to find ways to ease cash flow concerns for businesses to alleviate some of the pressure caused by the current pandemic.

Value Added Tax (VAT) is applied in different - and sometimes complex - ways by different tax authorities. Across Europe, a variety of approaches are being taken to payment deferrals and qualifying criteria in response to the coronavirus.

If you think your company may be impacted by either of the announcements below, please contact us to discuss your specific circumstances. You can also read about other measures designed to help companies with UK operations.  

UK VAT on eBook & Electronic Publications

With effect from 1 May 2020, electronic books and digital publications (such as online newspapers, magazines, books, academic papers and journals) will be zero-rated for UK VAT purposes, instead of subject to the standard rate of 20%. The VAT rate reduction was originally announced in March 2020 and was scheduled for 1 December 2020 but has been brought forward in response to the increased number of publications which are now only distributed digitally. This change applies to all transactions where the customer is located in the UK, regardless of the supplier's location.

EU VAT eCommerce Package

The EU VAT eCommerce package which was due to launch on 1 January 2021 has been pushed back to 1 July 2021 due to the pandemic. The eCommerce package includes:

  • ending distance selling thresholds which means cross-border sellers will have to charge the VAT rate applicable in the customer's location and remit it to the local tax authorities;
  • the introduction of the Import One-Stop-Shop (IOSS);
  • extending the Mini-One-Stop-Shop (MOSS) to include eCommerce goods;
  • the introduction of new One-Stop-Shop (OSS) returns
  • extending the OSS return to include the sale of services to consumers;
  • withdrawing the €22 exemption on low value consignments;
  • deeming marketplaces the supplier for VAT purposes on some transactions; and
  • introducing a €10k EU-wide threshold for micro-businesses for all of the above items.

Non-EU sellers

Sellers who are non-resident in the EU can use the OSS simplified filing; however, they must first register as a 'non-Union' taxpayer with the tax authority of an EU Member State.

For more information on VAT across Europe, contact Jamie Richardson or Sean O'Sullivan below:

Jamie Richardson
Tel: +44 (0)20 7430 5889

Sean O'Sullivan
Senior Tax Manager
Tel: +44 (0)20 7430 5966

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