Getting VAT Compliance Right for Black Friday Success

On 26 November, Black Friday presents another opportunity for retailers to drive e-commerce sales and boost revenue. It has become one of the biggest global retail events of the year, with shoppers increasingly turning to online retailers for the best deals.

Retailers will be working hard to prepare the best deals to entice shoppers but do you know where you stand with VAT compliance?

With the new EU E-Commerce VAT Package now in effect, this year B2C retailers can account for VAT on Black Friday sales in the EU in one single return.

The e-commerce package is a simplification, saving businesses valuable time and money. However, there are additional data requirements which have the potential to create significant issues if not managed appropriately.

What is the EU E-Commerce VAT Package?

The introduction of the EU E-Commerce VAT Package in July 2021 changed the VAT rules for intra-EU B2C supplies of goods and imports of low value goods.

It also introduced new methods of accounting for VAT by extending the existing Mini One Stop Shop (MOSS) into a much wider ranging One Stop Shop. As a result, businesses can now use one of three schemes to account and pay for VAT in one single return to all EU tax authorities:

• Import One Stop Shop (IOSS): for low value goods delivered from outside the EU
• One Stop Shop (OSS): for intra-EU B2C deliveries of goods and for intra-EU services provided B2C by EU established suppliers
• Non-Union One Stop Shop (non-Union OSS): which replaces and extends the current non-Union MOSS

Getting VAT ready for Black Friday: Registering for an OSS scheme

Black Friday, and the subsequent Cyber Monday, will drive e-commerce sales throughout the EU. It’s one of the busiest times for e-commerce, with retailers seeing some of the highest volume and value of orders over the period. As a result, many EU businesses selling into other EU countries will breach the single EU wide threshold of €10,000. Businesses selling imported goods valued less than €150 could face VAT obligations in multiple EU countries.

Registering for an OSS scheme will help to get VAT compliance right on Black Friday sales and reduce the tax burden.

However, not getting the data requirements right can result in the EU excluding a business from the OSS schemes. This ban lasts two years and the taxpayer would need to register for VAT in all relevant Member States. During this time VAT compliance costs are likely to increase, and new VAT numbers will be required urgently.

In addition, most non-EU businesses need to appoint an intermediary to use IOSS and can’t do it alone.