What preparations should sellers make in the face of the new EU tax law?

Do I need to register for OSS/IOSS?

What do independent site sellers need to pay attention to?

After reading this article, all your questions will be answered!

Table of contents

Part 1 How sellers deal with the new EU tax law

Part 2 OSS and IOSS Seller Guide

Part 3: Special attention to independent website sellers

Part 4 Seller FAQs

Part 1 Analysis of the EU's new tax policy

01 Platform sellers (Amazon/Ebay/AliExpress/EU local platforms, etc.)

1. There is inventory in the EU, FBA/overseas warehouse, Chinese sellers:

① The platform will withhold VAT (according to the tax rate of the destination country), but VAT registration is still required in the country where the inventory is located;

② After withholding, you still need to declare regularly. When declaring, you only need to fill in the net value of the goods excluding VAT tax, and you do not need to pay VAT;

③ Cancel restrictions on distance selling.

2. No inventory in the EU, self-delivery, Chinese sellers:

① No need to register and declare VAT;

② For goods with a parcel value of ≤€150, the platform will deduct and pay the fee;

③ For goods with a value of more than €150, sellers are responsible for paying VAT. After July 1, they will be banned from sale on Amazon France (only for self-delivery);

④ Orders cannot be split or combined, otherwise the buyer may need to pay additional taxes before signing for them;

⑤ If you want IOSS to guarantee smooth customs clearance, the platform will apply on your behalf.

02 Independent website sellers

You need to register for OSS and IOSS by yourself. Independent website sellers are the most affected by this tax reform.

For details, please see "PART 2 OSS and IOSS Seller Guide" and "Part 3 Special Note for Independent Station Sellers" below.

03 Summary of policy changes

➢ There is no tax exemption for self-delivery. Small packages shipped by self-delivery need to collect the seller's VAT when selling.

➢ All self-delivered goods will be labeled with IOSS number

➢ E-commerce platforms (Amazon/Ebay/AliExpress/Meikeduo, etc.) are considered suppliers and bear joint and several liability for VAT payments with sellers.

➢ E-commerce platforms need to collect VAT on goods with a sales value of less than 150 Euros

➢ Cross-border e-commerce companies will benefit from significantly reduced cross-border VAT compliance costs. Sellers can file VAT in a selected EU country through OSS VAT

➢ If the seller has overseas warehouses in other EU countries, or joins the Amazon FBA program, the country where the goods are stored still needs to register VAT and declare it locally.

04 What preparations should sellers make?

Part 2 OSS and IOSS Seller Guide

01 Clarify the concept

1. OSS and IOSS are systems that make VAT declaration more convenient. Therefore, many sellers think that "if you register for OSS/IOSS, you don't need a VAT number/EORI number", which is incorrect.

2. The difference is:

OSS is applicable to: shipments within the EU, to the EU;

IOSS is applicable to: shipments from outside the EU to within the EU; self-delivery of small packages below 150 Euros; no consumption tax is required.

02 Who needs to register IOSS

Currently, all cross-border sellers do not have to register with IOSS, but registration will be very convenient for customs clearance, with the following 3 advantages:

① IOSS facilitates the collection, declaration and payment of VAT by sellers of imported goods at a distance from the EU to buyers in the EU.

② IOSS also simplifies the procurement process, and there will be no unexpected fees when the goods are delivered, and buyers only need to pay when they purchase.

③ If the seller is not registered in IOSS, the buyer must pay the VAT and the customs clearance fees usually charged by the transporter.

IOSS is only applicable to self-delivery of small packages, so shipments from outside the EU to FBA/overseas warehouses within the EU are not applicable to IOSS.

03 How to register OSS/IOSS

There are two main types according to the seller’s situation:

1. Platform sellers (Amazon/Ebay/AliExpress, etc.) :

①OSS: Sellers do not need to worry about it, Amazon will be responsible for registering OSS and declaring it;

②IOSS: Apply on behalf of the platform. For example, Amazon will provide platform IOSS for sellers to use . After the seller generates an order, it will be displayed after the order. Sellers can also apply for it on their own through a tax agent.

2. Independent website sellers: need to register OSS/IOSS by themselves.

①Can IOSS from different companies be shared?

A: One company corresponds to one IOSS number. If you mix them up, first of all, you won't be able to pass the customs; secondly, when you file a tax return, you need to provide it together with the customs clearance documents. If the information doesn't match, the tax bureau will find out and the consequences will be very serious.

Therefore, it is not compliant to use Amazon's IOSS number for independent sites;

②I operate multiple self-built websites. Do I need to register multiple IOSS?

Answer: According to the previous question, it depends on the situation of the company where you build your own website. If a company operates multiple self-built websites, then only one IOSS number is required.

04 IOSS Notes

If you use IOSS, you should do the following:

✓ Display/show the VAT amount paid by the buyer in the EU at the latest at the end of the ordering process;

✓ Ensure that VAT is charged to buyers on all eligible goods at the EU destination country rate;

✓ Ensure that eligible goods are shipped with a value not exceeding EUR 150;

✓ Whenever possible, indicate on the invoice the price paid by the buyer in Euros;

✓ Submit an electronic VAT return every month through the IOSS official website in the country where you registered IOSS;

✓ Pay the VAT tax on the VAT return form every month in the member country where you are registered with IOSS;

✓ Keep all sales records that meet IOSS standards for 10 years;

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

05 IOSS FAQ

Does 1.150 Euro refer to the value of a single item or the value of the entire shipment?

A: It refers to the value of the shipment, so please do not split/combine orders for shipment.

2. Do I need to pay taxes when I declare IOSS? Isn't that a duplicate payment?

A: Platform sellers do not need to pay taxes when declaring, they just need to declare. In fact, the tax is withheld and paid by the platform.

Independent site sellers need to pay taxes when declaring.

3. What data do I need to provide to apply for IOSS?

A: Sellers need to provide accurate customs Deco data and sales data.

4.What is the difference between IOSS and VAT?

Answer: ①IOSS is a system that facilitates the collection, declaration and payment of VAT. Even if you register with IOSS, you still need to register a VAT number in the EU country where you have warehouses. If you do not have warehouses, you do not need to register a VAT number.

②The VAT import data and the back-end declaration data may be inconsistent. However, the IOSS import tax should be reported in the declaration stage according to the original amount of tax paid.

Sellers are required to provide: sales data, customs data and invoices , all three must match. Therefore, the seller's sales data and customs data must be consistent.

If there is any inconsistency, the tax bureau will directly cancel the IOSS number upon discovery, and the tax agent will also be required to bear corresponding responsibilities.

Part 3: Special attention for independent website sellers

Sellers on independent sites need to handle tax compliance issues themselves:

➢ VAT registration and declaration is required in the country where the warehouse is located

➢ If you have a local EU company, you can open the OSS VAT declaration system in the country where the company is located to make all EU declarations

➢ If all goods are shipped by yourself, you need to apply for VAT in an EU country, join the OSS VAT declaration system, and make all EU declarations

➢ Apply for an IOSS number in countries with VAT numbers to ensure smooth customs clearance of goods

➢ OSS VAT accounting is based on the accounting principle of the receiving country and is reported quarterly

Part 4 Answers to sellers’ frequently asked questions

01 Frequently Asked Questions for FBA/Overseas Warehouse Sellers:

Q: I am an FBA seller in China. Do I still need to pay import VAT when importing inventory to the EU?

A: Yes. Import VAT can be refunded during the declaration process. Some EU member states provide an import VAT deferral mechanism.

02 Frequently Asked Questions for Self-shipping Sellers:

1.Q: Do orders withheld by the customs (shipment value ≤ €150) need to pay import VAT to EU customs?

A: No. In order for EU customs to correctly identify that your order has been withheld, the IOSS number must be included in the customs declaration.

If the shipment value is inaccurate, or the IOSS number is not provided, your buyer may be required to pay additional EU taxes and duties to sign for the goods!

2. Question: Important content! I am a seller who ships from China and delivers B2C orders to the EU that are withheld and paid (shipment value ≤ €150). What are the requirements for IOSS related information?

A: ✔ For such shipments, please ensure that one order corresponds to one shipment (i.e. do not split one order into multiple shipments/combine multiple orders into one shipment);

✔ Confirm with the logistics carrier that Amazon will withhold VAT for this shipment;

✔ The following information must be provided to the logistics partner:

① IOSS number (displayed in the "Order Details" of the Seller Platform after July 1)

② The correct value of the shipment (should not exceed 150 Euros);

③ Amazon order number

Your logistics carrier is responsible for presenting this information to EU customs to exempt import VAT.

3. Question: What should I do if the buyer returns the order that was withheld and paid on my behalf?

A: If an order withheld by Amazon receives a partial or full refund, Amazon will be responsible for compensating your buyer for the VAT portion of the refund amount. Your operating procedures will not change.

Facing the new tax reform, if platform sellers do not want to be withheld, they can choose to register a local EU company;

Independent website sellers need to register for OSS and IOSS as early as possible to ensure compliance operations.