Update: MIA action around EU VAT policy changes

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The MIA has been working as a member of the Independent Retail Confederation to gather the experience of small independent retailers and present a clear picture to Government of the challenges of schemes such as IOSS (Import One Stop Shop). 

What’s the challenge? 

On the 1st July, the EU introduced the OSS (One Stop Shop) portal as a new way to help Resellers track and declare VAT on consumer user sales across all member states. The idea being that a Reseller would register in a single country and collate the details of all cross-border transactions completed within the EU into a single declaration and remittance. 

There is no doubt that there are benefits for those countries within the European Union, but for those third countries (such as the UK post-Brexit) it is somewhat more complicated. The IOSS scheme is the solution for Resellers in countries outside of the Union, and whilst it is similar in principle it is more complicated and limited in application. 

We have heard many examples across many sectors that Resellers are turning away from cross-border sales, simply because the costs of doing business are outweighing the benefits. Whether it is down to the loss of the small package exemption or the cost of hiring an intermediary, the figures for many smaller businesses just aren’t adding up. 

What has the MIA done? 

We’ve partnered with the Independent Retailers Confederation; an organisation that represents circa 100,000 independent retailers throughout the UK. The IRC provides a lobbying platform for a variety of trade associations, like the MIA, with shared interests. This partnership increases the profile and voice of independent retailing within Government and Parliament.

As part of our membership with the IRC, we’ll be meeting with the Minister for Small Business, Paul Scully, in late August to discuss EU VAT and cross-border sales. In order to provide as much data as possible prior to this meeting, we asked anybody who has been touched by this issue to complete a short survey. 

What was the response?

We were delighted that the MI industry contributed 30% of the responses to the IRC survey. Other sectors that participated include: books, gifts, greeting cards, cycles, clothes, art, jewellery, shoes, sports, DIY, pets, furniture, florists and many more.

Here is a summary of some of the key findings from the survey: 

When asked ‘Do you sell products into the EU?’

  • 49.76% answered ‘Yes’
  • 46.41% answered ‘I did, but I have now stopped due to the changes’ 
  • 2.87% answered ‘I was planning to, but now I’m uncertain’ 
  • 0.96% answered ‘No, but I plan to in the future’

When asked ‘What are/were your approximate annual sales into the EU? ‘ 

  • 85.65% answered ‘Less than £125k’
  • 5.74% answered ‘£126k – £250k’
  • 3.35% answered ‘Nil, but I plan to sell in the future’ 
  • 2.87% answered ‘£251k – £500k’ 
  • 1.44% answered ‘More than £1m’ 
  • 0.96% answered ‘£501k – £1m’ 

Additional Stats: 

  • 83.65% sell goods below €150 to EU countries
  • 64.90% are not registered in any countries and leave it to consumers in those countries to pay VAT on the import 
  • 46.15% sell goods above €150 to EU countries
  • 10.10% are registered with an intermediary and use IOSS
  • 1.92% are VAT registered with various countries and charge VAT at point of sale

The next part of the survey acknowledged that different retail sectors face different challenges and asked participants to share issues experienced in relation to exports in EU countries. There were many problems expressed including: costs outweighing benefits; mass confusion on rules, regulations and codes; complexity of the process; increased workload, and much more. These personal experiences will be vital in getting our point across to policymakers.

What happens next? 

The meeting with Paul Scully, Minister for Small Business, is taking place in late August. We’ll be using the data and feedback provided by independent retailers to lobby Government to find solutions to the OSS/IOSS challenges faced by many. We will of course keep you updated with any outcomes from this meeting.