Your question comes at a very appropriate time, as HMRC have just published detailed guidance on EU VAT payments and compliance relating to the One Stop Shop (OSS) returns process, which comes into effect from 1 October 2021.
However, this relates to the OSS VAT returns only, and this process should be followed by businesses registered for the OSS Union scheme, which is for distance sales of goods from Northern Ireland & EU, to the EU member states.
All these distance sales of goods must be reported on an OSS VAT Return.
Before completing an OSS VAT Return, businesses should check you can apply for the scheme and the steps you should take.
Online marketplaces should report sales made on behalf of sellers outside the UK and EU of goods located in Northern Ireland, to consumers in Northern Ireland on an OSS VAT Return.
Supplies of digital services to consumers in the EU must not be reported on the Union OSS VAT Return. UK suppliers would use the Non-Union OSS for these.
The guidance advises that the return must be submitted, and outstanding VAT paid, by the last day of the month following the end of each quarter. If no goods have been sold in the EU during a tax period, businesses must submit a nil return.
The next payment date for the period Quarter 3, from 1/7/21 to 30/9/21, is 31 October 2021.
Payment can be made using the online service when the return is submitted or at a later date, as long as the VAT is paid in full by the period deadline. The business will receive a unique payment reference from each return submitted. This will be automatically assigned to payments made by debit or credit cards and bank account payments. It will need to be added manually to make a payment by bank transfer (BACs).
If a deadline is missed, HMRC will issue a reminder on the 10th day following the deadline. It is important to note that businesses will be excluded from the OSS Union scheme if they miss the return and payment deadline for three consecutive periods and do not submit a return or payment within 10 days of a reminder being sent.
The exclusion will take effect on the first day of the next calendar quarter and will last a minimum of two years. If a business is excluded, it will no longer be able to complete OSS VAT returns and will need to register for VAT in each EU country where it makes sales to consumers in order to report and pay the VAT due.
Full details can be found here:
https://www.gov.uk/guidance/completing-a-one-stop-shop-vat-return
Union OSS and non-union OSS should not be confused with the IOSS (Import one stop shop), which is for goods located in the UK & sold to the EU
New simplifications for the declaration and payment of VAT in the EU on consignments where the intrinsic value of the consignment does not exceed €150 were introduced on 1 July 2021.
IOSS is a special scheme for distance sales of goods imported from third countries or third territories which allows for the declaration and payment of EU VAT due on import through a monthly IOSS return instead of the payment of the VAT to the customs authority at the time of importation.
Taxable persons that do not have an establishment in the EU can only register for the IOSS through an EU established intermediary.
VAT due on the supply is declared and paid by the supplier or their intermediary via the monthly IOSS return in the Member State where the taxpayer has registered for the IOSS.
The IOSS return must be filed by the end of the following month and must contain a breakdown of the total VAT amount to be paid in each Member State.
Further information can be found here on registering for IOSS in Ireland
Whilst the IOSS simplifies the import process for suppliers, it is not a mandatory system.
If a supplier chooses not to register for the IOSS, the arrangements in place prior to 1 July 2021 in relation to VAT on import will continue to apply.
All goods will have to be declared to the customs authority and the relevant VAT paid before the goods are released into free circulation in the EU.
There is a provision available for customs agents and parcel carriers where they can declare the goods, collect the VAT from the recipient on delivery, and remit the VAT to the relevant customs authority but we don’t know how widely this service is available.
Further details relating to changes introduced from July 2021 can be found within the HMRC policy paper EU Vat e-commerce-package:
https://www.gov.uk/government/publications/eu-e-commerce-package/eu-vat-e-commerce-package
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