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EU VAT e-commerce rules

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Summary

An optional scheme to help you report and pay all EU VAT through a single return in Accounting Start.

Resolution

This is an optional scheme to help you report and pay all EU VAT through a single return instead of having to register and pay VAT in each country you sell to.

This applies to sales to individuals or business who are based in the EU and who are not VAT registered. The scheme is called The One Stop Shop.

For the One Stop Shop schemes, you use Destination VAT. Instead of charging VAT at the usual Irish rate (or home rate), you charge VAT at the rate where your customer lives.

For example, if as an Irish business you sell goods to a customer in France, you charge VAT at the rate applicable in France.

Visit our business legislation hub to see how this may affect your business.

The One Stop Shop (OSS)

Use the One Stop Shop (OSS) to report and pay EU VAT on services to EU consumers which attract destination VAT. For a full list of services visit the European Commission website (opens in new tab).

Alongside the introduction of the OSS, the EU are also abolishing distance selling thresholds. This means you may now have distance sales of goods which are subject to destination VAT.

On 1 July the EU also abolished distance selling thresholds and replaced them with a single EU wide €10,000 (£8,818) threshold.

How to register

You can register for the OSS in an EU member state, usually your own. Once registered you can report all relevant EU VAT through a single return each quarter and make a single payment to the member state you register with.

European Commission guidance on the One Stop Shop schemes (opens in new tab).

Destination VAT in Sage Accounting

Destination VAT settings and reports are available in Sage Accounting.

Apply destination VAT in VAT settings
Choose whether to apply destination VAT rules to EU consumers. We’ll automatically add ledger account 2206 VAT on Destination Sales so you can report separately on the total amount you have charged for destination VAT.

Invoicing with destination VAT

Before you start

If you need to charge destination VAT, check that you have added:

  • Destination VAT rules in financial settings
  • An EU customer who is not VAT registered

To create a sales invoice for goods:

  1. Go to Sales, Sales Invoices, and select New Invoice.
  2. In the Customer field, select your EU customer from the list, or type the customer name. If the customer is not a saved contact, select Add a customer to create a record for them.
  3. In Goods/Services select Goods (and related services) to apply destination VAT rules. The destination VAT rate will automatically calculate.
     TIP: To calculate destination VAT on the invoice, check that you selected destination VAT rules in financial setting and that you have selected an EU customer that is not VAT registered.
  4. Repeat step 3 on a new line for as many items as you need to add to your invoice.
  5. Select Save.

The VAT return

The VAT element on destination VAT sales is excluded from your VAT return. You need to report this on your OSS VAT return through the OSS system.

Create a sales invoice for OSS services:
  1. Go to Sales, Sales Invoices, and select New Invoice.
  2. In the Customer field, select your EU customer from the list, or type the customer name. If the customer is not a saved contact, select Add a customer to create a record for them.
  3. In EU Goods/Services select Services (standalone) to apply destination VAT rules.
     TIP: To calculate destination VAT on the invoice, check that you selected destination VAT rules in financial settings and that you have selected an EU customer that is not VAT registered. 
  4. Repeat step 3 on a new line for as many items as you need to add to your invoice.
     TIP: An invoice cannot contain services subject to both home and destination VAT. If you need to invoice a service item that has home VAT rules, you must create another invoice.     
  5. Select Save.

The VAT return

The VAT element on destination VAT sales is excluded from your VAT return. You need to report this on your OSS VAT return through the OSS system.