EU businesses engaged in cross-border e-commerce need to pay attention to the EU’s new e-commerce regulations.
Import One-Stop Shop (IOSS) is the electronic portal that entered into force on July 1 2021, for businesses to fulfill their VAT e-commerce obligations in remote sales. The VAT rules valid until 1 July 2021, import VAT is not required for goods with a value of up to 22 Euros.
The new VAT e-commerce rules will repeal this provision effective July 1, 2021. Thus, from 1 July 2021, goods imported into the EU from a third country, or a third region are subject to VAT, regardless of their value.
What is IOSS?
IOSS allows suppliers and electronic interfaces selling imported goods to buyers in the EU to collect, declare and pay VAT to tax authorities. Prior to that, for products over 22 EUR. The buyer had to pay VAT as soon as the goods were imported into the EU.
IOSS (Import One Stop Shop) and OSS (One Stop Shop) are EU customs procedures for VAT (Value Added Tax) on goods sold across the EU by non-EU sellers.
IOSS is used by non-EU businesses to declare and pay VAT on cross-border sales of goods to consumers in the EU. OSS is used by EU businesses to declare and pay VAT on cross-border sales of goods within the EU.
What are the advantages of IOSS?
IOSS facilitates the collection, declaration and payment of VAT for sellers who sell imported goods at distance to buyers in the EU.
IOSS is only charged at the time of purchase, making the process easier for the buyer. There are no surprise fees when the goods are delivered. If the seller is not registered with IOSS, the buyer has to pay the VAT and the customs clearance fee usually charged by the shipper.
What has changed on 01 July 2021?
The value-added tax (VAT) exemption for imports of goods not exceeding 22 Euros. It has been removed on July 1, 2021. As a result, all goods imported into the EU are subject to VAT.
IOSS created to facilitate and simplify VAT declaration and payment for goods sold remotely by sellers from the EU or a non-EU country or region. In addition, VAT payment is only valid for purchases made by a buyer within the EU and for goods under 150 Euros.
If it is possible to sell goods to buyers in the EU via an electronic interface, the electronic interface is considered to have made the sale and is in principle responsible for the payment of VAT.
What goods supply does IOSS cover?
Sending or transported outside the EU at the time of sale. If the order contains more than one product. It shipped or transported in consignments whose total value does not exceed 150 Euros (goods of low value). It is not subject to excise taxes (applies to alcohol or tobacco products).
How does IOSS work?
Sellers registered with IOSS are required to apply VAT when selling goods intended for a buyer in an EU Member State. The VAT rate is the rate applicable in the EU Member State to which the goods are to be delivered. Information on VAT rates in the EU is available both on the European Commission website and on the websites of national tax administrations.
How can you register for IOSS?
Providing the person declaring the goods at the EU border with the necessary information for customs clearance in the EU, including the IOSS VAT identification number. Cooperate with the actual seller of the good(s) to ensure that the information required for customs clearance in the EU, including the IOSS VAT identification number, reaches the EU customs where the goods are to be imported. The VAT amount payable by the buyer in the EU when the order process is completed at the latest. It would be ensured that VAT charged to the buyer on the supply of all eligible goods with a final destination in an EU Member State.
To the extent possible, show on the invoice the price paid by the buyer in EUR. The return submission an electronic monthly VAT return through the IOSS portal of the Member State in which you are identified for IOSS. Make the monthly payment of VAT declared in the VAT return to the Member State in which you are defined for IOSS. Keep records of all eligible IOSS sales and sales provided for 10 years.
Sellers does not need to collect VAT on goods sales in the following cases:
You sell multiple goods to the same buyer and these goods are sent in a package that exceeds 150 Euros. These goods will be taxed on import in the EU Member State.
The distance goods sales are facilitated by an electronic interface such as a marketplace or platforms. In this case, the electronic interface is responsible for VAT due. It is not required to collect and report VAT on sales of imported goods in the following cases: the actual seller sells multiple goods to the same buyer and these goods are shipped in a package exceeding 150 Euros. These goods will be taxed on import in the EU Member State.
What Non-EU countries need to know about IOSS & OSS?
Non-EU countries should be aware of these procedures if they are planning to sell goods to EU consumers or if they are involved in cross-border sales within the EU. They should make sure they understand the requirements for registering for IOSS or OSS and for reporting and paying VAT in accordance with EU rules.
IOSS (Import One Stop Shop) and OSS (One Stop Shop) are systems for non-Union (i.e., non-European Union) suppliers to account for VAT on sales of goods to customers in the EU. Compliance: Non-compliance with IOSS/OSS regulations can result in fines and penalties.
- IOSS is for non-EU based businesses selling goods via an e-commerce platform to consumers in the EU.
- OSS is for non-EU based businesses supplying telecommunication, broadcasting and e-services to customers in the EU.
Non-EU businesses need to know the following about IOSS & OSS:
- Responsibility for VAT: The business is responsible for VAT payments in the EU country where the customer is located, not where the business is based.
- Thresholds: IOSS & OSS apply to businesses selling goods/services above a certain annual threshold (e.g., €10,000 in some countries).
- Enrollment: Businesses must enroll in the IOSS/OSS scheme and obtain a VAT number in the EU country where they want to register.
- Reporting and payment: Businesses must report and pay VAT on sales in the EU through the IOSS/OSS system, not through the usual VAT return process.