Streamline sales order approval in European Union

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hi guys and welcome to the boffix youtube channel now as of today july the 1st 2021 the eu are making some changes to its bat rules now i've already done a couple of posts on our social media platforms just to give you a heads up of these changes we've given a brief description of these changes and who it affects but in this video we're going to dive a little bit deeper into that information for you so i'm going to hand you over now to chartered accountant head of accounts here at boffix uk certified trainer and the quickbooks chat aaron patrick so he can explain it all for us hello welcome to this video okay so let's get straight to the point on this one first of all on the first of july 2021 so as of time of recording we've not got too long left for this one the eu is making changes to its fat rules this will affect shipments to the eu so any european country and those made between eu countries the eu so one of the big changes here is that currently prior to the first july you always had that 22 euros fat exemption from imports unfortunately though from july that 22 vat exemption will completely disappear and from july that will be charged on imports on the eu regardless of value so no more 22 euros exemption that will apply on the rate of the buyer's country of residents so if you think about it if you're selling from the uk and you sell to germany or you sell to spain doesn't matter where it is you're selling to potentially it's going to be up to you to be able to actually apply the vat as of germany france spain's vat rates please bear in mind that it's not the same for every eu country in fact they all have varying degrees of differences when it comes to v80 for goods valued up to 150 euros though there is a bit of good news and this is where it gets a little bit more simpler compared to what it used to be you can now use what's called ioss which stands for import one-stop shop when importing goods valued 150 euros or less businesses will be able to charge back at the point of sale by using the new eu's new import one-stop shop or we're going to call it ioss this excludes goods subject to exercise duty alternatively it can still be collected from the receiver but the ioss is designed to make the process smoother helping to avoid unexpected customs and carry admin fees for your customers so if you think about it currently if you send something to the eu then what happens is you send that item and then the customer experience is that they're going to get a email or letter and they're then going to have to make due on that import duty and that was because in a lot of friction in fact as much as 30 percent of the goods that we were sending from the uk to eu was being returned back because the end consumer your customer wasn't willing to pay that import duty and if you think from your own experience it's really difficult to account for it because you're not knowing how much your import duty is going to be until it actually arrives on your doorstep or at least that due for payment arrives on your doorstep so the idea of ioss is to remove that completely so the buyer knows exactly how much the item is going to cost from day one they pay those items and it's up to you as the owner then or the business owner to then actually make good on that v80 and that's what we're going to talk about now the eu is changing the distance selling that threshold regime until now eu businesses have had to register for that in each individual eu country in which they sell goods and charge customers their domestic vat rate once sales hit a certain threshold and those certain thresholds were actually quite beneficial to you because it was between 30 thousand euros to 100 euros just depending on which country you were selling in but because it was all individual you had to actually make enough sales in that particular country for you to hit the threshold and for going forward from july this threshold is completely being removed and the vat rate must be charged from the first sale however businesses can choose to close their vat registration in different eu countries and file all sales through a single one-stop shop that return vat would be paid to the home battle ferry to the eu country of registration then forward to relevant eu countries of the buyers the vat rates of those countries would still apply and you would need to charge the customs ingly there is exemption to eu businesses that sells less than 10 000 per annum cross border on businesses to consumer goods and services these businesses can charge their domestic back rate and report sales in their usual domestic fat return now there's a lot to take in there but one of the key things to think about from this is the fact that now if you are looking to sell over abroad and you will especially if you're looking to actually have a branch out overboard so if you're looking to you know have an area within the eu where you can actually hold all your goods you're going to sell them to the rest of europe because from a company trying to grow and expand europe is a place that is going to have lots and lots of benefits for businesses it's a huge market to be in so a lot of businesses are looking to growth there a lot of businesses are going to want to be there now from our experience it seems that like for you to be able to complete this one-stop shop you'll need to gonna have to be registered full v80 in one of those european countries now you don't need to create a new business or anything like that within that european country your uk business will suffice as long as you're about registered what you are going to need to do is pick a country to actually hold and have your first initial registration now from our experience it seems like germany is the place to be a they're one of the biggest players in the eu anyway so it's always going to be a marketplace that's going to be attractive to a lot of uk businesses and b they just seem to have it a little bit more straightforward with the requirements for people to actually have a german back return or a german bat number should i say and the requirements for actually filing their vat numbers in fact most of accountants out there should have the capability to be able to go out there get yourself a german registration and that will then basically be your entry point into the rest of the eu we do find that it's going to be case by case but at the moment it seems that germany is the place to be looking out for now this is all talking about if you're going to be selling directly what about if you use online marketplaces ebay amazon themselves places well actually this is really good news for you because online marketplaces will collect that rather than the sellers for business to consumer so instead of you the actual individual seller who's selling on ebay for example when you make that sale ebay will then add on the relevant v80 and collect that v80 and then make due and pay that v80 so to clarify for business to consumer transactions made through online marketplaces vat liability collecting and also reporting for sales in eu countries will fall on the marketplace so that's the ebay rather than the third party sellers who use it if the consignment is valued less than 150 euros the marketplace will be recognized as the supplier this applies for both domestic and cross-border transactions it means that businesses using online marketplaces may be able to end their vat registration in the eu member states as they will no longer be responsible for collecting and reporting bat so it's a huge change there also though do think about what that means for your business what's going to happen when it comes to you quote selling those transactions abroad well though what that means is if you use an online marketplace the first and foremost your transactions the business is that you're selling the items to ebay or amazon or whatever it's going to be with no b80 on it whatsoever because remember their job is then to add on the v80 based on whatever customer and what their customers base of entry entries or whatever country they're from that's the vat that's going to be added on ebay amazon or whatever the marketplace will be will then grab that output v80 and what it's going to do then it's going to take that output that v80 and it's going to pass it over to whichever relevant country using their own ios s now for you to be able to do this though that means that when you send your goods from the uk to the eu you need to make sure those goods have the marketplace's ioss number now they'll only have one number and it'll be the same number each and every time and it has to be done electronically but that ioss number basically says that when it goes through customs and imports and everything else that the duties have already been paid on these goods therefore your buyer isn't going to get a request for another import duty on top because you could quite imagine how frustrated your customer would be if they paid for vat when they paid for it and then got an import duty as well as so to avoid anything like that please please please make sure that your ioss number is going to be shown prominently on the importing documents and electronically on those importing documents so that when you send them and they go through imports and excise they won't get branched and they won't have to have additional input on now this is a really complicated area and it's something that i think not a lot of businesses are fully prepared for so if you want to know more especially about ioss and all about all of the little nuances over there you're already in the right place so make sure you give us a like make sure you give us a subscribe we're going to be looking into this a lot more deeply and also we're going to be putting on some live interactive sessions so that you can ask your questions when you need them now get yourself out there go sell to the european market your business deserves that growth we want your business to grow as always here at bafix it's all about making sure that your business doesn't just survive it thrives and to me selling in the marketplace seems like the perfect one back to lizzie thanks aaron so we hope that you found that information helpful and easy to understand if you did then please do leave us a like if you have any more questions then feel free to leave a comment below finally don't forget to subscribe for other business updates tax tips and more thanks for watching and hopefully we'll see you again soon bye