UK – Does a UK e-commerce business need an IOSS Intermediary when selling to the EU?
On 1 July 2021, the EU’s new e-commerce VAT reforms were introduced allowing sellers to no longer pay import VAT at clearance on low-value consignments, but instead opt to charge customers VAT at the point of sale via their own website. This means that sellers will charge VAT at their customer’s own country’s VAT rates and will report and pay this via a new Import One-Stop-Shop (IOSS) VAT return.
To use the IOSS, non-EU sellers must appoint an intermediary. This is a taxable person established in an EU country who is responsible for declaring and paying VAT on behalf of the non-EU seller. The intermediary also becomes jointly liable for any VAT owed by the seller on these types of transactions.
As the UK is no longer part of the EU, most would assume that UK companies will be considered as non-EU companies and therefore require an intermediary for IOSS purposes. However, due to the mutual assistance clause in the Brexit Trade and Cooperation Deal, some EU countries are now stating that the intermediary obligations are not required for UK businesses who should be able to register themselves via the UK tax authorities. An example of this is Italy, who have confirmed no IOSS intermediary is required for UK companies, despite the European Commission officially stating that an intermediary is required for UK companies.
This has created confusion and could leave some UK sellers in an awkward position as although HMRC has confirmed that it will introduce the IOSS system, it also stated that this will not be ready by the 1 July implementation deadline.