eBay alerts sellers on UK & EU ecommerce VAT reforms
- Sep 14, 2020 | Richard Asquith
eBay is alerting its sellers to the upcoming UK and EU VAT changes on ecommerce. Under the UK’s Brexit ecommerce reforms following the ending of the Brexit transition period on 31 December 2020, marketplaces like eBay will become responsible for charging, collecting and remitting the UK VAT on certain transactions.
Similar reforms are proceeding with the EU VAT ecommerce package, including simplifications of pan-EU reporting, via the VAT ecommerce package which comes into effect on 1 July 2021.
Both the UK and EU are withdrawing the VAT distance selling simplifications, too.
Ending import VAT exemption threshold
In both cases, the UK’s and EU’s low value consignment stock relief – a VAT exemption on imported parcels – will be withdrawn. These thresholds for the UK and EU are currently £15 and €22, respectively. Instead, VAT will be charged at the point-of-sale (the checkout) up to values not exceeding £135 and €150, respectively.
UK ecommerce imports and oversees sellers
Firstly, from 1 January 2021, and UK imported sale on eBay (or any facilitating marketplace) not exceeding £135 will change VAT treatment. The marketplace will take on the VAT obligations and rights. The UK or overseas seller will first make a zero-rated supply with the right to deduct sale to the marketplace. They will record this in a UK VAT return. The marketplace must then make a UK domestic VAT sale to the consumer. The VAT due is charged to the consumer by the marketplace at the time of sale via the checkout. This is instead of at the border as import VAT.
Secondly, for overseas sellers only, eBay (or any facilitating marketplace) will be responsible for the VAT obligations on any value sale where the goods were already in the UK. B2B sales may involve the VAT obligations being shifted to the customer if they can provide a VAT number.
All sellers in both cases above must show the gross price and VAT rate in their UK listings for eBay. This will enable the marketplace to determine the correct VAT due. The prices will be displayed to customers inclusive of UK VAT where eBay is the marketplace VAT deemed supplier in the checkout.
EU VAT package reforms
eBay is also alerting sellers to the EU’s reforms on 1 July 2021. It includes the same import VAT collections changes, non-EU sellers VAT obligations and the marketplace deemed seller new rules. But a new, single EU VAT return – One Stop Shop OSS – will also be available for sellers to declare their pan-EU distance sales.
eBay reminds sellers that the EU €22 VAT exemption on parcel sales from outside the EU to EU consumers is being withdrawn. Where eBay has facilitated the sale, it becomes responsible for charging sales VAT to the buyer if the consignment value does not exceed €150. eBay will do this through the checkout process – replacing the current import VAT rules and payment to customs. Note – where eBay is not involved, any sellers can use a new VAT Import One Stop Shop IOSS return to cover all imported sales up to €135.
For non-EU sellers, eBay will also be responsible for all EU B2C sales on its marketplace when the goods are already in the EU at the time of the sale. The seller must first sell the goods to eBay, which then sells and charges local VAT to the EU consumer.
In both cases, sellers must provide eBay with prices of goods and the right VAT rate. eBay will list the prices inclusive of VAT.