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EU VAT A Strain On Small Businesses

Gift and home retailers are among the 65% of small UK businesses that have been put off taking orders from EU customers, according to a recent poll by the online magazine Shop Small, Love Local.

On July 1, the EU introduced new rules on how VAT is accounted for on cross-border trade. All orders under 150 euros supplied to customers in EU countries have to charge VAT at the correct VAT rate for the country in which the consumer resides.

Above: The online poll was conducted though the Support UK Small Business network on Instagram for the Shop Small, Love Local campaign.
Above: The online poll was conducted though the Support UK Small Business network on Instagram for the Shop Small, Love Local campaign.

Some 56% of small businesses said they did not fully understand the changed rules. A further 22% were worried about the cost implications for their business. According to Shop Small, Love Local the main area of confusion for small business owners is how to calculate, collect and pay the VAT due on sales.

Poll respondents included small businesses from across the UK selling goods including gift and homewares. A third of respondents stated that they would regularly have received orders from EU customers.

For companies that need further clarification, the British Independent Retailers Association (Bira) and the Federation of Small Businesses (FSB) are among organisations offering advice to independent retailers that are selling to EU customers.

 

Top: The EU’s new VAT rules are putting a damper on small UK businesses trading with EU customers.

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