[galvin]

This looks like a poor attempt to compensate for leaving the VAT MOSS scheme.

As I understand it, vendors in the EU have to charge tax rates based on the customers location and transfer those taxes to the customers country. For example, a shop in Germany that sells to a customer in Italy has to collect Italian VAT and send that VAT to the Italian tax service.

VAT MOSS simplifies this by allowing vendors to send those taxes to their local tax service which handles the international transfers so while vendors still have to charge multiple tax rates they only have to register and pay taxes in a single country.

Apparently the UK wants to continue collecting VAT from EU vendors but since they have left the EU they must invent their own scheme to do so.

https://europa.eu/youreurope/business/taxation/vat/vat-digit...

[AnssiH]

Your link applies to digital services only, while the UK change is for physical goods only.

But MOSS is indeed scheduled to be extended to cover physical goods on July 1st, 2021 (https://ec.europa.eu/taxation_customs/business/vat/modernisi...), and this UK scheme is indeed somewhat similar to that.

However, EU vendors only have to charge destination country VAT if they exceed a yearly sales threshold (currently 35000 EUR or 100000 EUR depending on destination country, and after July 1st 10000 EUR EU-wide).

And the EU import scheme will remain optional to out-of-EU sellers, unlike the UK scheme.

[galvin]

Thanks for pointing that out, it's an important detail.

I worked on a VAT system for an online store but I never looked into the regulation so my knowledge is limited!