Trade will be severely impacted for GB exporters to the EU who are not registered for VAT, unless they sign up to a new scheme.
The Institute of Export & International Trade (IOE&IT) says major changes to VAT, payable by traders selling into the EU and within the EU’s trading bloc of 27 member countries, will be in force from 1 July.
One key change affecting e-commerce in particular is that items imported into the EU with a value less than €22 (around £18, depending on exchange rate) will no longer be exempt from VAT.
This measure means that all goods sent directly from GB to consumers in the EU, both via online marketplaces and sales made directly, will be subject to the local rate of VAT in the buyer’s country.
To ease the burden, the EU is allowing businesses selling into the EU, including from Great Britain, to handle these new import VAT requirements via its new Import One Stop Shop (IOSS) scheme.
For businesses trading within the EU, there is the One Stop Shop (OSS) scheme.
Kevin Shakespeare, director of the Academy at IOE&IT, said: “For reporting of EU Value Added Tax via OSS and IOSS, e-commerce firms will need to set up a legal entity in an EU country or get an authorised fiscal representative in that country.
“If GB traders don’t register, their ability to provide e-commerce to the EU will be severely impacted from 1 July.”
Meanwhile, the UK is hoping to be the first European nation to strike a ground breaking digital deal with Singapore.
The UK and Singapore are starting negotiations on a digital economy agreement (DEA) to open up opportunities for British businesses to deliver their services.
Both countries are considered digital economy leaders and 70 per cent of UK services exports to Singapore in 2019, from financial and legal services to music streaming and e-books, were digitally delivered, worth £3.2 billion. Among areas under discussion is how to deepen cooperation in growth sectors such as fintech and lawtech.
Other topics for negotiations include securing open digital markets for exporters, ensuring cross border data flows, cutting red tape and upholding IP rights.
Britain signed a free trade agreement with Singapore in December, covering its £17 billion trading relationship, according to the BBC.
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