Q6: E-Commerce and the implementation of the VAT reform as of 1 July 2021 will put a set of challenges to UK E Commerce, what initiatives are taken to guide UK exporters in that perspective? Are specific talks on going with regards to NI and VAT reform which needs to be according UCC rules?
A: The EU's e-Commerce reforms will be introduced on 1 July and affect the movement of goods between Northern Ireland and the EU and imports of low value into the EU or Northern Ireland. The reforms will also introduce new rules for supplies made through online market places, which is similar to the rules introduced in the UK from 1 January that already apply in Great Britain and partly in Northern Ireland.
In Northern Ireland, the existing individual EU distance selling threshold set by each Member State will be replaced with a single EU wide distance selling threshold of £8,818 (10,000 EUR). This threshold applies to supplies of goods and certain electronically supplied services. However, as the Northern Ireland Protocol only applies to goods, the UK's implementation will only apply to supplies of goods in respect of Northern Ireland. This means businesses selling B2C goods from Northern Ireland to the EU and from the EU to Northern Ireland above the distance selling threshold will be affected by the new rules.
The changes also apply to imports of (non-excise) goods into the EU and Northern Ireland in consignments not exceeding an intrinsic value of £135 (150 EUR) and online market places that facilitate these supplies. The UK implemented similar requirements related to imports into Northern Ireland from outside the UK and the EU on 1 January 2021.
To ease burdens on businesses, two new online schemes will be introduced to simplify accounting for and paying for VAT in each Member State where businesses have customers; the One Stop Scheme (OSS) can be used to account for VAT on the supply of goods to customers between EU Member States and NI on a single quarterly OSS return with one payment; and the Import One Stop Scheme (IOSS) can be used to acount for import. VAT on the supply of non-excise goods to customers across the EU on a single monthly IOSS return with one payment. Both of these schemes are optional. The UK will be taking a phased approach to the introduction of these online schemes. HMRC has published guidance on how this will apply in NI on 13 May which can be found here https://www.gov.uk/government/publications/eu-e-commerce-package/eu-vat-e-commerce-package
EU guidance on the e-commerce reforms can be found here https://ec.europa.eu/taxation_customs/business/vat/vat-e-commerce_en
The UK is implementing the EU's e-Commerce reforms in Norhtern Ireland in accordance with the UK obligations under the Northern Ireland Protocol, where EU VAT rules with respect to goods continue to apply.