If you’re a non-EU business selling goods valued at up to €150 to customers in the EU, there are some important changes taking effect from 01 July 2021.
These changes will mean everything you’re selling will now be subject to VAT, calculated at the local rate of the country your customer is based in. There’s no longer an exemption for parcels valued up to €22.
Selling to customers in lots of different EU countries could get quite complicated quickly, which is why the EU has introduced a scheme called the Import One Stop Shop (IOSS).
If the goods you ship are over €150 Euros they won’t be eligible under the IOSS scheme and you’ll have to pay VAT under the B2C import scheme.
What is IOSS?
IOSS is optional and allows you to register with just one of the 27 EU tax authorities, and submit one monthly IOSS VAT return in a way that allows the right payment of VAT across the other EU tax authorities where your customers are based.
IOSS covers distance sales of goods that are:
Dispatched or transported from outside of the EU at the time they are sold
Dispatched or transported in consignments with a value not exceeding €150
Not subject to excise duties (typically applied to alcohol or tobacco products)
IOSS makes the process easier for the buyer too, who is only charged VAT at the point of sale by the supplier and won’t have any unexpected fees/charges on delivery.
Registering for IOSS
You can register for IOSS from 1st April 2021 on a portal of any member state. If your business is not based in the EU, they will need to appoint an EU-established intermediary to file the VAT obligation.
Once registered, you will receive your personal IOSS number which you can include in the sending details of all the parcels you send to your customers. This ensures that your customers don’t have to pay tax on receipt of their goods.
Monthly IOSS reporting
Each month you’ll need to prepare and submit your monthly IOSS VAT returns. If customers have returned goods to you that month, you’ll need to make sure all VAT adjustments are made via your monthly return.
What are my other options if I don’t want to register for IOSS?
For businesses who only send a very small number of parcels to the EU each year, it may be better to consider a ‘pay per parcel’ solution whereby a third party acts as the deemed reseller – allowing you to use their IOSS number to send parcels to customers located in the EU.
If you have no solution at all in place, your EU customers will have to pay the correct VAT plus handling/clearance fees before they can receive their parcel.
This could result in your customers refusing delivery of the goods, especially if they weren’t aware of this cost when they made the purchase.
How we can help
If you would like further help on the IOSS, we can advise on what it means for your business, provide guidance on registering and help you set up your accounting systems to most easily manage the IOSS filings. Please get in touch, we’re here to help.