ALL YOU NEED TO KNOW ABOUT THE IMPORT ONE-STOP SHOP (IOSS)|Laws|SIT Testing Lab

ALL YOU NEED TO KNOW ABOUT THE IMPORT ONE-STOP SHOP (IOSS)

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.

According to the VAT rules applicable up until 1 July 2021, no import VAT has to be paid for commercial goods of a value up to EUR 22.

The new VAT e-commerce rules will abolish this provision as of 1 July 2021. Thus, from 1 July 2021, all commercial goods imported into the EU from a third country or third territory will be subject to VAT irrespective of their value.

What is the IOSS for?

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 as it was previously the case (for products over 22 EUR).

What are the advantages of the IOSS?

The IOSS facilitates the collection, declaration and payment of VAT for sellers that are making distance sales of imported goods to buyers in the EU. The IOSS also makes the process easier for the buyer, who is only charged at the time of purchase, and therefore does not face any surprise fees when the goods are delivered. If the seller is not registered in the IOSS, the buyer has to pay the VAT and usually a customs clearance fee charged by the transporter .

What is changing from 1 July 2021?

From 1 July 2021 the value added tax (VAT) exemption for the importation of goods not exceeding EUR 22 will be removed. As a result, all goods imported to the EU will be subject to VAT.

The Import One-Stop Shop (IOSS) was created to facilitate and simplify the declaration and payment of VAT for goods sold from a distance by sellers from either the EU or from a non-EU country or territory. Furthermore, VAT payment is applicable only to purchases made by a buyer within the EU and for goods valued at less than EUR 150.

From 1 July 2021, the VAT exemption for the importation of goods into the EU not exceeding EUR 22 will be removed. As a result, all goods imported into the EU will be subject to VAT.

If the sale of goods is facilitated through an electronic interface to buyers in the EU, the electronic interface will be considered to have made the sale and is in principle liable for the payment of VAT.

The IOSS was created to facilitate and simplify the declaration and payment of VAT for goods sold from a distance by sellers from either the EU or from a non-EU country or territory. Furthermore, VAT payment is applicable only to purchases made by a buyer within the EU and for goods valued at less than EUR 150.

Which supplies of goods does the IOSS cover?

The IOSS covers the sale of goods from a distance that are:

dispatched or transported from outside of the EU at the time they are sold;
dispatched or transported in consignments with a value not exceeding a total of EUR 150 (low value goods) even if the order contains more than one item;
not subject to excise duties (typically applied to alcohol or tobacco products).

When an electronic interface facilitates the sales of imported goods from a supplier and the goods are:

dispatched or transported from outside of the EU at the time they are sold;
dispatched or transported in consignments with a value not exceeding EUR 150 (low value goods);
not subject to excise duties (typically applied to alcohol or tobacco products).

The electronic interface is considered to have facilitated the sale of imported goods when it allows a buyer and a seller to enter into contact via that electronic interface, where the end result is the sale of goods to that buyer.

How does the IOSS work?

Sellers registered in the IOSS need to apply VAT when selling goods destined for a buyer in an EU Member State. The VAT rate is the one applicable in the EU Member State where the goods are to be delivered. Information on the VAT rates in the EU is available on both the European Commission website and on the websites of national tax administrations.

Electronic interfaces registered in the IOSS will pay the VAT due on sale by the buyer instead of the actual taxable seller in an EU Member State.

The VAT rate is the one applicable in the EU Member State where the goods are to be delivered. Information on the VAT rates in the EU is available on both the European Commission website and on the websites of national tax administrations.

How can you register for the IOSS?

From 1 April 2021, you can register businesses on the IOSS portal of any EU Member State. If businesses are not based in the EU, they will normally need to appoint an EU-established intermediary to fulfil their VAT obligations under IOSS. The IOSS registration is valid for all distance sales of imported goods to buyers in the EU. You can start using the IOSS only for the goods sold as from 1 July 2021.

The electronic interface can register on the IOSS portal of any EU Member State from 1 April 2021. If the electronic interface is not established in the EU, it will normally need to appoint an EU-established intermediary to fulfil the VAT obligations under IOSS.

This IOSS registration is valid for all distance sales of imported goods to buyers in the EU.

You can start using the IOSS only for the goods sold as from 1 July 2021.

What you need to do if you use the IOSS?

provide the information required for customs clearance in the EU, including the IOSS VAT identification number to the person declaring the goods at the EU border;
show/display the amount of VAT to be paid by the buyer in the EU, at the latest when the ordering process is finalised;
ensure the collection of VAT from the buyer on the supply of all eligible goods with final destination in an EU Member State;
make sure that eligible goods are shipped in consignments not exceeding the EUR 150 threshold;
to the extent possible, show on the invoice the price paid by the buyer in EUR;
submit an electronic monthly VAT return via the IOSS portal of the Member State where you are identified for IOSS;
make a monthly payment of the VAT declared in the VAT return to the Member State where you are identified for IOSS;
keep records of all eligible IOSS sales and/or sales facilitated over 10 years;

collaborate 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 will be imported to.
show/display the amount of VAT to be paid by the buyer in the EU, at the latest when the ordering process is finalised;
ensure the collection of VAT from the buyer on the supply of all eligible goods with a final destination in an EU Member State;
make sure that eligible goods are shipped in consignments not exceeding the EUR 150 threshold, even if this total is only achieved by more than one item;
to the extent possible, show on the invoice the price paid by the buyer in EUR;
submit an electronic monthly VAT return via the IOSS portal of the Member State where you are identified for IOSS;
make a monthly payment of the VAT declared in the VAT return to the Member State where you are identified for IOSS;
keep records of all eligible IOSS sales and/or sales facilitated over 10 years;

Some exceptions will apply

You do not need to charge VAT on sales of goods in the following circumstances:

You sell several goods to the same buyer, and these goods are shipped in a package amounting to more than EUR 150. These goods will be taxed at importation in the EU Member State;
Your distance sales of goods are facilitated by an electronic interface such as a marketplace or platforms. In this situation, the electronic interface is responsible for the VAT due.

The EI does not need to collect and/or report the VAT on sales of imported goods in the following circumstances:

The actual seller sells several goods to the same buyer and these goods are shipped in a package amounting to more than EUR 150. These goods will be taxed at importation in the EU Member State.