What is IOSS? IOSS Review

1. About IOSS

Under the VAT regulations applicable until July 1, 2021, commercial goods with a value of no more than €22 will not be subject to import VAT.

The new VAT e-commerce rules will repeal this provision from 1 July 2021. Therefore, from 1 July 2021, all commercial goods imported into the EU from third countries or territories will be subject to VAT, regardless of their value.

IOSS allows suppliers and electronic interfaces selling imported goods to buyers in the EU to collect, declare and pay VAT to tax authorities, rather than having buyers pay VAT when goods are imported into the EU as was previously the case.

IOSS was established to facilitate and simplify the VAT declaration and payment on imported goods (valued up to EUR 150) sold over distance.

For sellers who import goods to the EU over long distances, IOSS facilitates the collection, declaration and payment of VAT. IOSS also provides convenience for buyers, who are only charged at the time of purchase, so there are no other additional costs when the goods are delivered. If the seller is not registered with IOSS, the buyer must pay VAT and the customs clearance fees usually charged by the transporter when the goods are imported into the EU.

2. What are the advantages of IOSS?

IOSS facilitates the collection, declaration and payment of VAT by sellers selling imported goods at a distance to buyers in the EU.

In addition, IOSS simplifies the purchasing process and there will be no unexpected fees when the goods are delivered, and buyers only need to pay when they purchase.

If the seller is not registered with IOSS, the buyer must pay VAT as well as customs clearance fees usually charged by the transporter.

3. What products does IOSS cover?

IOSS covers the distance sale of the following goods:

1. Sold and shipped from or to countries outside the European Union;

2. The value of the consigned goods does not exceed 150 Euros;

3. No excise tax (usually applied to alcohol or tobacco products)

4. How to register IOSS?

From April 1, 2021, sellers in the EU can register through the IOSS portal in any EU member state.

If your business is not based in the EU, you will generally need to appoint a legal establishment established within the EU to fulfil your VAT obligations under IOSS.

IOSS registration applies to all long-distance sales of imported goods to buyers in the EU.

5. How to use IOSS?

1. Provide the person declaring the goods at the EU border with the information required for customs clearance in the EU, including the IOSS VAT identification number;

2. Display the amount of VAT paid by the buyer in the EU at the latest during the ordering process;

3. Ensure that VAT is charged to the buyer on all qualifying goods whose final destination is in an EU Member State;

4. Ensure that consignments of eligible goods do not exceed the €150 threshold;

5. Show the price in Euros paid by the buyer on the invoice whenever possible;

6. Submit monthly electronic VAT returns via the IOSS portal of your IOSS member country;

7. Pay to you the VAT refunded to you on a monthly basis from your IOSS member country’s VAT return;

8. Keep all eligible IOSS sales records and/or sales records for more than 10 years