The Import One Stop Shop (IOSS) is a government platform for the submission of declarations and the payment of VAT on low-value consignments.
The program reduces the amount of time needed to complete documentation and reduces the administration time, which significantly decreases costs related to processing.
On July 1, 2021, the exemption from value-added tax (VAT) for goods imported to the European Union valued at €22 or less will no longer apply.
This limit was used as under this value there is also an exemption for customs duties, so VAT is the main tax to deal with at import.
What is IOSS, and What Does It Do?
The IOSS allows suppliers and electronic interfaces selling imported goods to buyers in the EU to collect, declare and pay the VAT to the tax authorities, instead of making the buyer pay the VAT at the moment the goods are imported into the EU.
The International Sales Service is a VAT collection scheme facilitating the VAT collection by non-EU companies who are making distance sales of imported goods to consumers in the EU.
The IOSS makes the method easier for the buyer, who is only charged VAT at the point of sale by the supplier, and therefore does not face any unforeseen fees/charges when the goods are delivered.
If you are a non-EU company selling goods from outside of the EU to consumers within it, then you may be obliged to register.
IOSS is an Electronic Portal to help compliance
The Import One Stop Shop (IOSS) is the electronic portal businesses can use from 1 July 2021 to comply with their VAT e-commerce obligations on distance sales of imported goods.
Currently, EU and non-EU sellers selling goods online to EU consumers can import the goods into the EU, directly to the consumer, import VAT-free if the consignment of good(s) is valued at €22 or below. This ends 1 July 2021.
What Happens if the Supplier is not Registered for IOSS?
If the supplier is not registered for the IOSS, then depending on the terms of trade, either the buyer has to pay the VAT and any clearance fee charged by the courier or the seller may need to VAT register in the country of destination and deal with the import VAT and charge local VAT on the sale.
Which European Member States Can Register for IOSS?
When you are established in the European Union then you must register at the business location.
However, if you are not established in the European Union you can choose which EU member state to register for IOSS.
You will be registered with effect from the date the European Union member state issues you with your VAT IOSS identification number.
Each European Union member state will have an online IOSS portal where businesses can register.
Starting from July 1 2021, It Will Be Easier.
From 1 July 2021, all goods imported into the EU from a third country or third territory will be subject to VAT regardless of their value.
This makes it easier for them because they only have to charge VAT at the point of sale, so their clients do not have to pay VAT on top of the product cost when taking receipt of the goods.
If they are not registered for the IOSS, then they can either choose not to deliver products or else tax clearance fees must be paid by clients on delivery.
Calculating The Price Of My Goods To See If They Better The €150 Limit.
The value of your goods must not exceed €150 to qualify for the VAT-free threshold. Value is determined by taking the total price of the goods and subtracting transport and insurance costs (unless included in the price and not separately itemised) and any other costs itemised separately on the invoice (e.g. tooling costs, licence fees) then adding any other taxes and charges as ascertainable by the customs authority.
A prerequisite for duty-free goods is that the price of the goods on which the exemption of customs duty is claimed does not exceed €150 per kilogramme net.
The first step in calculating the customs value of your goods is to add up the price of all the goods you are shipping. Then, look at the HS tariff classification for those goods.
All of those numbers should match, and you should be discussing with your suppliers if there are any additional charges included in that price. Once you’ve done that, you’ll need to look at the first column on the right (NAFTA Tariff heading).
How Does Import One Stop Shop Account For All Supplies to EU Consumers, Notwithstanding of Value?
The IOSS provides value for businesses that sell goods across borders. No matter the product, you can benefit from our knowledge and expertise. We make international trade easy for e-commerce sellers and help them comply with customs regulations across the EU.
The IOSS covers distance sales of goods that are:
· Transported from outside of the EU at the time they are sold
· Transported in consignments with a value not exceeding EUR 150
· Not subject to excise duties (typically applied to alcohol or tobacco products)
How does the Import One Stop Shop Process Work?
As a taxpayer operating in an IOSS member state, you have certain obligations concerning intra-EU distance sales of your goods (i.e., the sale of goods to another EU member state).
There are specific legal requirements on how you have to declare these charges and remit the VAT collected at each stage of the supply chain.
As a taxpayer registered for IOSS, you are not allowed to charge VAT on B2C sales outside your home country or if you sell in a non-EU country.
Once registered for IOSS, you will be required to charge VAT at the point of sale based upon where your customer belongs.
On sending you will identify the goods which clearly show your IOSS ID number and will incorporate a less complicated customs declaration.
Customs, at the country of destination, will verify the IOSS ID number before allowing the goods to continue their journey to your customer.
The VAT you have collected at the point of sale will need to be declared on your IOSS return. The IOSS return, and payment of the VAT, will need to be made to the fiscal authorities of the EU member state where you have registered for IOSS.
How is VAT accounted for and paid at the point of sale?
You are required to submit all Import One Stop Shop eligible supplies on your one Import One Stop Shop return – If you made eligible supplies to each of the European Union member states, you declare all of these on the one Import One Stop Shop return.
Is an intermediary required if I register for Import One Stop Shop?
Under EU regulations (see guidance) businesses importing goods from mutual assistance countries are subject to certain requirements.
If the business imports goods from a mutual assistance country, no intermediary is required. As of 2 June 2021, it is not confirmed if the UK will be able to avoid the intermediary requirement.
What options are available if I choose not to register for Import One Stop Shop?
The registration for IOSS is optional at present.
You can continue with your current systems where you treat your supply as an export.
For the import, either you will need to register in the destination country, or your customer will have to pay the import VAT and any handling charges.
Selling goods to EU consumers from the UK, through e-Commerce - How does it work
Where an e-commerce marketplace promotes a supply of eligible goods which are located outside the EU at the point of sale, the marketplace becomes the ‘deemed supplier’.
This means if you have sold the goods to the marketplace, and the marketplace is then selling the goods to the end customer, it is not your business.
Your supply to the marketplace will be zero-rated (with a right of VAT deduction), the e-commerce marketplace will then charge VAT to the end customer and the e-commerce marketplace will account for this through the IOSS process on the marketplaces own IOSS return.
What VAT should we charge our customers?
You are required to charge the VAT rate applicable in the country of the customer/destination country.
WTA UK appreciates this is a challenging space to understand. We are experts in Global trade and can assist you with all your needs to ensure success with IOSS.
