Non-EU sellers will need to appoint an intermediary in order to register for IOSS. Upon registration for IOSS, the tax authorities in the EU Member State of registration will issue an IOSS VAT registration number.

Once registered for IOSS, the seller will then show the price of the goods and the VAT amount due on the respective order when it is placed so that the customer can pay the full amount, including any VAT due, at the point of sale. The VAT rate applicable will be the VAT rate in the EU Member State to which the goods are delivered.

The IOSS number should then be provided to Parcelhub in order to avoid VAT being charged at the point of importation.

IOSS returns are submitted monthly to the Member State of registration for all goods supplied to final consumers located across all of the EU Member States. The deadline for payment of the VAT is the end of the month following the month of reporting. For non-EU sellers registered through an intermediary, the relevant information may need to be provided to the intermediary to fulfill the obligations of filing the IOSS returns.

The Import One-Stop-Shop summarised:

• 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.
• The IOSS facilitates the collection, declaration, and payment of VAT for sellers that are making distance sales of imported goods to buyers in the EU.
• The IOSS also 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.
• If the seller is not registered in the IOSS, the buyer has to pay the VAT and usually a customs clearance fee charged by the transporter at the moment the goods are imported into the EU.

The eCommerce VAT rule:

The EU rules governing the VAT treatment of the sale of e-commerce goods made to consumers in the EU. The rules are intended to create a ‘level playing field’ in terms of tax collection between local and non-resident sellers. In summary, they will seek to:

• Ensure that all goods sent directly from third countries (e.g. the UK) to final consumers (e.g. private individuals) in the EU are subject to VAT and that VAT is paid to the tax authority in the country where the private individual receiving the goods is resident.
• Ensure that VAT is charged and paid by non-EU established sellers that sell goods to final consumers through online marketplaces and digital platforms.
• Ensure that VAT is charged and paid by EU-established sellers that sell goods to final consumers through online marketplaces, digital platforms, and on their own account cross-border within the EU.

As noted above, the new rules are principally aimed to efficiently collect tax from direct sellers and from marketplaces.

The EU changes that will apply to direct sellers can be summarised as follows:

• All goods imported into the EU will be subject to VAT irrespective of their value.
• The EUR 150 threshold for customs duty will remain and goods above this value will be subject to both VAT and Duty.
• The current distance sales VAT thresholds for EU-based sellers making sales to EU consumers are removed and VAT is due in line with the destination principle. This is unless a seller’s overall B2C sales (i.e. sales to final consumers) to all EU Member States fall below an annual threshold of EUR 10,000.
• UK sellers will fall into the category of non-EU sellers and will be subject to the same rules as any other non-EU sellers.
• In order to help facilitate and effectively manage the changes, the Import One Stop Shop (“IOSS”) will be introduced. Sellers who supply goods valued at up to EUR 150 can apply to use the IOSS scheme. This allows suppliers selling goods to consumers in the EU to collect VAT on sales of imported goods from the customer at the point of sale and to declare and pay VAT via the IOSS.

How to calculate the value of the good:

• The value of the good is also referred to as the intrinsic value.
• This does NOT include the transport or insurance costs.
• VAT, however, is applicable on transport and insurance costs.

Assisted IOSS VAT solutions designed for eCommerce sellers

As a business, you can register and file your own EU VAT returns, in order to meet the IOSS requirements all you need to do is to input your IOSS number.

Parcelhub has partnered with Deloitte and Taxamo to offer our ‘assisted’ IOSS solutions, to help businesses continue to ship goods into Europe:

Deloitte set-up, register for IOSS, preparing and submitting your monthly IOSS VAT returns, dealing with all queries that arise, along the way.

• Deloitte’s service is best suited to businesses that are sending larger volumes of parcels into the EU each year.
• Have an accounting system able to charge the correct VAT rate, applicable on the goods you are selling into the EU
• Be collecting this tax at the point of sale
• Service costs £2,000 per year, plus a £300 registration fee in year one.

Find out more about the service

A simple ‘pay-as-you-go’ option where Taxamo becomes the VAT ‘deemed reseller’ when it facilitates through its electronic interface the sale of your goods valued at up to €150 to consumers located in the EU.

• For sales where Taxamo is the electronic interface, there is no need for you to register for IOSS and file tax returns.
• This solution will allow you to comply with the new rules and ensure a smooth delivery experience for your customers.
• Once you have integrated the technology into your checkout, you know exactly what to charge at the checkout, for each customer transaction.

Find out more about the service

Which assisted IOSS service is right for my business?

The options for sending goods into Europe from the UK

This is a summary of the options available for eCommerce sellers sending parcels to the EU, this summary will help you understand which option is best suited to your business and parcel delivery volumes.

Frequently Asked Questions:

From when are the rules changing?

The rules will take effect from 1 July 2021.

When will I get my IOSS number?

On the assumption, you have provided all the information in a timely manner, and dependent on the tax authorities’ processing times, we expect this to take 5-7 weeks from the time the registration application is submitted.

When can I start using my IOSS number?

Once it has been issued you can start using your IOSS number from 1 July 2021.

What does the 150EUR limit refer to?

Only goods shipped in a single package with a total price of up to 150EUR would qualify for the IOSS. IOSS also excludes goods subject to excise duties (of any value). The 150EUR refers to the price of the goods themselves when sold to the EU. This excludes insurance and transport costs, unless these are already included in the price, and excludes any other taxes and charges.

Do parcels sent using IOSS incur a handling charge?

No. Parcels sent using IOSS should not incur a handling charge.

What if I am selling via an online marketplace?

Deloitte’s IOSS service has been designed for those businesses selling directly from their own e-commerce sites to customers in the EU. If you’re selling via an online marketplace instead, there are different rules for you to consider. Deloitte’s VAT solution for marketplace sellers may be the better option for you.

Can IOSS be used for B2B sales?

No, IOSS can only be used for B2C sales. Please note, you should obtain your customer’s VAT number as evidence that they are a business customer (and therefore outside of the IOSS).

Do I need an intermediary?

As a non-EU seller, you will need an intermediary if you wish to use IOSS. If you use the Deloitte IOSS service, they will set you up with a third party in order to ensure you have an intermediary for the IOSS.

What is the deadline for the IOSS return?

You need to submit an IOSS return each month to the tax authority in the registration country. The return deadline is the end of the month after the reporting period.

How do I pay the tax due and what is the payment deadline?

The deadline for these payments is the end of the month following the reporting month, the same as the return deadline. As you are established outside the EU, you are registered through a VAT intermediary. You should make a monthly payment of VAT due as declared in the IOSS VAT return to the VAT intermediary at least a few working days prior to the payment deadline as instructed. The VAT intermediary will make the payment to the tax authority in the Member State of registration on your behalf.

I am from Northern Ireland (NI). Why is IOSS not relevant for me?

When an e-commerce seller in NI sells goods to consumers in the EU, NI is treated as being within the EU and as such the seller is not importing into the EU. We are awaiting further confirmation from HM Revenue & Customs as to how these rules apply to NI sellers and how they should register.

What rate of VAT will apply to my sales?

This will depend on the type of goods sold and the country in which the customer is based. In the EU the standard VAT rate currently ranges between 17% and 27%. However, a reduced rate may also be applicable for certain goods, which could range from 3% to 18% in the EU. You should seek specific advice on the VAT rate applicable to your sales if you are unsure of the correct rate to apply.

If I have a question about the Deloitte IOSS service, who can I contact?

If you have any questions about how the Deloitte IOSS service will work for you, please email them at [email protected]. If you have any specific queries or require advice, please let them know and they will find a specialist that will be able to help.

Where can I learn more about IOSS?

The EU has published information regarding IOSS here. The UK Government has published information regarding the 1 July rule changes here.