October 25 2021

United Kingdom Updates EU VAT E-Commerce Package Rules

Source: IBFD Tax Research Platform News

On 20 September 2021, the United Kingdom updated its policy paper on the EU value added tax (VAT) e-commerce package, which had entered into effect on 1 July 2021.

The EU VAT e-commerce package introduces changes affecting:

  • the movement of goods from Northern Ireland to the European Union;
  • imports of low value goods in the European Union or Northern Ireland; and
  • the rules for supplies made through online marketplaces.

As the Northern Ireland Protocol only applies to goods, the United Kingdom will not include electronically supplied services in its reporting system.

The HM Revenue and Customs (HMRC) policy paper outlines the changes for:

  • distance sales, i.e. sale of goods between Northern Ireland and the European Union;
  • imports;
  • online marketplaces; and
  • online marketplaces and supplies within the European Union.

The policy paper contains examples of how the EU VAT e-commerce package rules work in various situations for the United Kingdom. Reference is also made to the use of the One-Stop Shop and Import One-Stop Shop to reduce the administrative burdens.