What is the IOSS?
In a post-Brexit world, there are lots of things to consider if you are an eCommerce business shipping goods to or from Europe. To try and make things a little simpler for business the European Commission is introducing the Import One-Stop Shop (IOSS) from the 1st of July 2021, but what is it, and should you register for it?
This blog will detail everything you need to know about IOSS and how CSM can help ship your goods to the European Union (EU) and if you are short on time, we have put together a checklist to help you prepare for the changes.
What is the IOSS?
The IOSS is an online portal by the European Commission to make VAT compliance easier for B2C eCommerce businesses outside of EU, selling goods to buyers in the EU. From 1st July all commercial goods, no matter the value, will be subject to import VAT.
The IOSS online portal allows suppliers selling goods to buyers in the EU to collect, declare and pay VAT to the tax authorities instead of the buyer paying VAT as soon as goods are imported to the EU. From 1st July goods of any value are subject to VAT as the current EUR 22 rules will be abolished.
Why should I register for the IOSS?
The IOSS will make collecting, declaring and paying VAT a lot easier for sellers of imported goods in the EU. The IOSS will also make the process easier for buyers as they will only be charged at point of purchase and won’t be subject to any surprise fees once goods are delivered. The IOSS will help ensure you are paying, collecting and declaring the correct amount of VAT for the goods being sold. There are some exceptions which can be viewed on the European Commission website.
How can I register for the IOSS?
From 1st April 2021, you can register businesses on the IOSS portal for any EU member state. If businesses are not based in an EU state, they need to appoint an EU-established intermediary to fulfil their VAT obligations under the IOSS. Once registered, you can start using the portal from 1st July.
The IOSS checklist
- Identify the areas of your business that are going to be impacted by the new EU VAT rules
- Systems and master data updates are likely to be required to identify and apply the appropriate VAT rates in multiple jurisdictions. Ensure you discuss your business’s VAT needs with your accountant.
- Consider registering for the IOSS if you would like to use a single registration to pay VAT throughout the EU for B2C shipments up to the value of €150.
- Appoint an intermediary in the EU to handle tax compliance on your behalf if you register for IOSS. This is vital if you don’t have an EU-based establishment.
- Review any existing foreign EU VAT registrations if you wish to replace these with a single IOSS registration. Existing registrations may need to be cancelled in order to utilise the IOSS.
- If you are selling through an online marketplace, contact the platform you are selling on to understand who will be responsible for VAT accounting for your B2C shipments up to the value of €150.
- It is important to note that if you choose to use the IOSS, a commercial shipment invoice will still be required to accompany your shipment. You can find more information about IOSS invoicing here: https://ec.europa.eu/taxation_customs/business/vat/ioss_en
If you need any assistance with registering for IOSS or would like to discuss the registration process, please get in touch with our team, who will be happy to talk through any questions you may have about shipping terms. If you have questions regarding the tax side of IOSS please contact your accountant.