Q. What is the Import One Stop Shop?
The Import One Stop Shop (IOSS) is an online portal that businesses can use from 1 July, 2021 to file VAT returns for imports. This has been introduced as part of the EU VAT e-commerce package, where the import of low value goods that don’t exceed €150 (£135) will be subject to VAT.
Low value goods are those that are in consignments with an intrinsic value (the price of the supplies, excluding discrete packaging and postal charges) of €150 (£135), imported into the EU or Northern Ireland.
Q. What is the purpose of IOSS and how does it help?
The IOSS was introduced to allow suppliers and marketplaces selling imported goods to EU buyers to collect and pay VAT in a simpler way. With this option, you don’t need to register in each EU member state to keep up with your VAT obligations, and you can simply use the portal to file your monthly VAT. The buyer is charged VAT at the point of sale, and doesn’t have to face any unexpected fees when the goods are delivered.
Previously, VAT would be applied at the very end, and the customer would have to pay an unexpected amount. With the IOSS, the process of customs clearance is much faster, because by then, VAT would have already been calculated and applied. This gives the customer complete knowledge of the exact amount they’d have to pay.
Q. What changes does IOSS bring?
a) No more low-value consignment relief (LVCR)
The previous VAT exemption, where imports valuing less than €22 (£20), is removed with the introduction of the IOSS. From July 2021, VAT will apply to all goods. You can file your VAT for imports falling under the threshold of €150 using the IOSS. This portal can be used by businesses outside the EU, including the UK. Goods that cross €150 will continue to be charged with VAT, as per the existing rules.
b) Marketplaces will become deemed suppliers
From July 1, 2021, online sellers and marketplaces will become deemed suppliers. In other words, they will be in charge of collecting and paying VAT on behalf of the seller. Marketplaces that facilitate the sale of imported goods can opt to use the IOSS to file monthly VAT returns. Note that the IOSS won’t be applied to goods that are subject to excise duties (like alcohol or tobacco products).
c) Customs clearance becomes easier
If you’ve registered for the IOSS, you don’t need to pay import VAT at the customs clearance. However, if the value of your items crosses the threshold amount, you’ll have to pay import VAT to customs.
Q. Who can use the IOSS?
Any business (including charities and non-profit organisations) that imports goods falling under the threshold amount of €150, even if the order contains more than one item, into the EU or Northern Ireland, can use the IOSS. These goods, when sold, must be transported from outside the EU and must not be subject to excise duty.
Q. Is IOSS mandatory?
IOSS is optional. However, once you register, you should use the portal for all applicable sales. If you don’t want to opt for this, you’ll have to register and pay VAT in each of the EU countries in which you sell to customers, and will have to apply VAT upon imports.
Q. How does IOSS affect me as a seller?
If you’re a non-EU seller, you’ll have to charge VAT on imported goods and can register for the IOSS in just one EU state to declare and pay the amount. The VAT rate that you’ll have to apply will be the rate in the destination state (the EU member state where your goods will be delivered). If these goods cross the threshold amount, they will be taxed at importation in the respective EU Member State.
In the case of marketplaces, since they facilitate sales on behalf of other sellers, they’ll become a deemed supplier, and can register for the IOSS as well. If so, they’ll be in charge of collecting and paying VAT that’s due on sale, instead of the seller having to take care of it.
Q. How can I register for IOSS?
From April 1, 2021, you can register on the IOSS portal of any EU Member State of your choice. If you’re a non-EU business, you should appoint an EU-based intermediary to act on your behalf and fulfil your VAT obligations under the IOSS. In case you already have an agreement with the EU, related to mutual aid in VAT recovery, then you don’t have to appoint an intermediary.
When you register for the IOSS, remember to continue following your regular VAT requirements in your own country. If you don’t opt for IOSS and don’t select an intermediary, you can continue your business as it is, and import VAT will be applied at customs.
If you haven’t registered with the IOSS, your buyer will have to pay VAT. The transporter will also charge a customs clearance fee.
Q. What should I do once I’ve registered for IOSS?
Once you ensure that the value of the consignment doesn’t exceed the threshold, you (as the supplier or the deemed supplier) have to display the VAT amount to be paid to the buyer. After this, you’ll have to submit a monthly VAT return via the IOSS portal of the EU member state you’ve registered in, and keep records of these sales.
Marketplaces that facilitate sales will have to be in contact with the sellers, and have to pass on details like the IOSS VAT identification number to the EU customs for customs clearance.
Q. Can I use IOSS to reclaim input VAT or offset VAT returns?
No. You can use IOSS to pay output VAT, but you cannot use it to reclaim input VAT.
Q. I have a business in Great Britain. How do I use IOSS?
If you have a business in Great Britain and you’re selling to the EU or Northern Ireland, you should follow the usual steps of paying VAT via IOSS for sales falling below the €150 threshold. You can also report your IOSS number to HMRC before transporting your goods to Northern Ireland. If you’ve registered for the IOSS but haven’t registered for VAT (you may fall below the threshold), you can submit your IOSS number to HMRC, but you need not charge VAT on your sale.