For non-EU sellers, the IOSS is possibly the most important aspect of the EU VAT reforms. Since the 1st of July, it has been possible for sellers to streamline their operations by submitting most of their EU VAT returns in one monthly return via the IOSS. This is likely to save a lot of time and money for both you and your customers. But what exactly is the IOSS? Is it right for you and, if so, how do you register for it? This article will answer all these questions and will even tell you how we can assist you in the process.
What Is The IOSS?
IOSS stands for Import One Stop Shop. The system is designed to lessen the administrative burden on foreign sellers for their low-consignment deliveries (under €150). Essentially, the system allows sellers from outside the EU to submit all of their sales that do not exceed €150 to EU countries in one monthly tax return to one country in which they are registered in, rather than filing an individual returns to each individual EU country. The EU tax authorities will then distribute the VAT.
Not only will this save sellers a lot of administrative hassle, but products imported to the EU with a valid IOSS number will pass through customs automatically, rather than being charged import VAT. This will allow for faster and cheaper deliveries for sellers and customers alike.
What’s The Difference Between This & The OSS?
The two systems work in a similar way, but they are not the same. The main difference is that the OSS is for EU-based sellers, or those who are VAT registered in the EU or/and hold goods in the EU. If you use the OSS, you can remit quarterly returns for all your pan-European sales to your country of residence or registration and there is no limit on the value of consignments.
Alternatively, the IOSS is for non-EU sellers and has a cap when it comes to the value of consignments which has been set at €150. You do not have to be VAT registered in an EU member state to use the IOSS, but you do need to have an EU-based intermediary. We can act as an intermediary for you. You can find out more about the differences between the two systems in our previous article on the OSS & IOSS.
So What Do I Need To Do If The Value Of The Consignment Exceeds €150?
These deliveries will not fall under the scope of the IOSS, and the usual rules for importing to a third-party country will apply. This means you will then have to decide whether to deliver DDU or DDP.
So, Is The IOSS Right For Me?
Registration for the IOSS is not mandatory, but in most cases it is recommended.
Basically, if you make sales regularly to the EU that have a value of less than €150 then the IOSS would be very helpful to you. The reduced time your items spend at customs, and the ability to avoid additional taxes and customs fees means you will be able to accurately advertise the price of your products to consumers.
But If I’m A Marketplace Seller, Should I Still Use The IOSS?
This is a good question as the rules for the IOSS and Amazon sellers are different. The new EU VAT rules for ecommerce have placed much more responsibility on facilitating marketplaces. This new responsibility extends to all B2C sales under €150.
This means that when you make a sale on an online marketplace under €150 you should use the marketplaces IOSS ID number rather than your own. Thus, if you only sell through online marketplaces there is no need for you to register for the IOSS.
However, if you make additional sales from your own website, you should still consider registering for the IOSS as Amazon will not be responsible for collecting VAT on these sales. You can find out more about the new rules regarding online marketplaces here.
How Do I Register For The IOSS?
How you can register depends on whether you are based in the EU or not. Assuming you are not based in the EU, you will have to appoint an EU intermediary who will complete the registration for you via any of the EU-member states’ portals.
The intermediary is quite handy, as they will fulfil your VAT obligations on your behalf. They can do this by using a specific VAT identification number for your business transactions. As stated earlier, we can act as an intermediary for you. Contact us to find out more.
If you are based in the EU, you do not need to appoint an intermediary and you are free to access the portal and register.
Once Registered, What Will I Need To Do?
There are a few things you will need to do once you are registered to use the system correctly. Firstly, and most obviously, you will have to begin using you IOSS ID number on your shipments. How you label your products will have to be adjusted to comply with the IOSS provisions – for example, you will have to include the HS-code for all your shipments.
On top of this, if you are a UK-based seller, you will need to inform HMRC that you have registered for the IOSS, and you will also need to inform them of your IOSS ID number. You can do this here.
If I Am UK VAT Registered, What Do I Have To Do When Selling Into Northern Ireland?
If you happen to be VAT registered and registered for the IOSS, you will have to submit your VAT returns for sales to Northern Ireland on your IOSS returns. This only applies to sales below £135.
If you are a business in the UK but you are not VAT registered in the UK, you will not need to charge VAT on low-value goods that you sell into Northern Ireland.
We Can Help You
If you have any questions about the IOSS or EU VAT rules, please get in contact with us. Our tax experts specialise in helping ecommerce sellers expand their business. Furthermore, we can even help you register for the IOSS/OSS and act as your EU intermediary if you are based outside of the EU.
Please do not hesitate to give us a call on 07734 182821 or send an e-mail to firstname.lastname@example.org.