All you need to know about the import one stop shop (IOSS) scheme.
From 1 July 2021 the VAT exemption for the importation of goods with a value 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 distance sales of imported goods with a value not exceeding EUR 150.
Benefits of IOSS
- facilitates the collection, declaration and payment of VAT for sellers that are making distance sales of imported goods to buyers in the EU
- 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
- the shipment is also free of customs duty usually charged by the transporter at the moment the goods are imported in the EU.
The IOSS covers distance sales of goods that are:
- dispatched or transported from outside of the EU at the time they are sold (GB is a third country, different rules apply to Northern Ireland)
- dispatched or transported in consignments with a value not exceeding EUR 150 (this is the total value of the shipment, not the value of each item within a shipment, so if an order comprises two items each of EUR 100, that order will be subject to import VAT)
- not subject to excise duties (typically applied to alcohol or tobacco products).
Operation and registration
The seller can register his business on the IOSS portal of any EU member state from 1 April 2021.
If the business is not based in the EU, they will normally need to appoint an EU-established intermediary to fulfil VAT obligations under IOSS.
The IOSS registration is valid for all distance sales of imported goods made to buyers in the EU.
Sellers registered in the IOSS need to apply VAT at the rate that is applicable in the EU member state where the goods are to be delivered.
Information on the VAT rates in the EU can be found here.
Accounting records and returns
If you use IOSS you should do the following:
- 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 that have an EU member state as their final destination
- make sure that eligible goods are shipped in consignments with a value not exceeding EUR 150
- 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 the business is registered for IOSS; the first return will be due for July 2021 and must be submitted by the end of August
- make a monthly payment of the VAT declared in the VAT return to the member state where you are registered for IOSS; the first payment will be due for July 2021 and must be paid by the end of August
- keep records of all eligible IOSS sales for ten years
- 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.
You do not need to charge VAT on distance sales of imported 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 platform. In this situation, the electronic interface is responsible for the VAT due.
The EU member states are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.
This article has been shared from ACCA In Practice, to whom copyright belongs. Whitefield Tax are an ACCA Member Firm