The IOSS is an electronic portal that allows you to declare and remit VAT on sales of low-value goods imported and sold to buyers in the EU. It can only be used if:
- The value of the imported goods is €150 or less
- The goods are located outside the EU at the time of sale and dispatched to private individuals in the EU
What is the meaning of IOSS?
IOSS stands for Import One-Stop Shop, which is an electronic portal that businesses can use to help them comply with ecommerce VAT obligations for distance sales of imported goods. The IOSS only applies to goods valued at €150 or less, and they must have been imported from outside the EU and shipped to EU customers.
The IOSS was implemented in July 2021 and aimed to simplify the declaration and payment of VAT on long distance sales of imported goods and streamline international shipping processes.
What is an IOSS number?
When you register for the IOSS, you will receive a unique identification number; this is your IOSS number. Your IOSS number can be used across the EU and allows you to pay the taxes you owe on goods sold to EU countries under a single monthly VAT return. This means you don’t need to fill out individual forms and pay different amounts of VAT for different countries.
How does IOSS work?
The IOSS follows the process outlined below:
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Registration: Businesses wanting to utilise the IOSS will have to register first. Once registered, they can display VAT at checkout and collect VAT from sales based on the customer’s location.
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VAT Return: Businesses submit a monthly VAT return to the Member State of Identification, which is the Member State where the business is registered. The Member State of Identification then passes the VAT return information on to every Member State mentioned on the VAT return.
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VAT Payments: The business pays the VAT they owe to their Member State of Identification, which then provides the appropriate amount of VAT to the Member States mentioned on the VAT return.
When submitting your VAT return, you will need to provide the following info:
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ID number
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Taxable period
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IOSS-relevant turnover
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Tax rate and VAT type
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Tax amount and total tax liability
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Any corrections to previous tax periods
Benefits of the IOSS
The new IOSS aims to create a swift, efficient, and transparent import process for both customers and sellers. The main benefits associated with the IOSS are outlined below:
Reduced admin work
The IOSS allows you to pay the VAT you owe on your goods across all EU countries. This means you do not have to fill out individual forms and pay different amounts of tax for every individual country you have sold goods to.
This reduces the amount of paperwork you need to fill out, saving you time and effort.
Expedited customs clearance
In addition, the sale is When using the IOSS, your sales are expected to benefit from a reduced customs clearance time that could mean a faster delivery time to customers.
Businesses that have not registered with the IOSS will have their goods held at customs until VAT is paid. However, IOSS-registered businesses will have their IOSS number checked by customs who will then dispatch the goods. As they are not waiting on a VAT payment, goods are not held for as long and the customs clearance process is expedited.
Improved customer satisfaction
Under the current system, buyers of most goods sent from outside the EU are liable to pay import VAT. This often comes as a nasty surprise to the customer, which results in a poor customer experience and sometimes a loss in revenue if the customer decides to return the goods.
By registering for IOSS, sellers will be able to provide buyers with full cost transparency by charging the VAT at the point of sale. With no more surprise costs added to their order, customers will feel more satisfied.
Restrictions of the IOSS
Although there are many benefits to the IOSS, there are a few restrictions that it is important to be aware of:
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The IOSS does not apply to goods valued at over €150
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The IOSS does not apply to excise goods, including alcohol and cigarettes
Registering for the IOSS
IOSS registration opened in April 2021, and there are various ways of registering for IOSS depending on your individual circumstances.
Register with your in-country tax authority
If your business is established in an EU Member State, you can apply for the IOSS in the country it is established.
Appoint an intermediary for IOSS registration
If your business is established in a non-EU country, you will be required to appoint a VAT intermediary to apply to the IOSS. Your appointed intermediary will register in their country for IOSS purposes on behalf of your business.
The VAT intermediary should be a taxable person established in the EU and will be responsible for declaring and paying the IOSS VAT on behalf of the non-EU seller.
Utilize marketplaces and e-commerce platform integrations
Many online marketplaces will be registered for the IOSS already. If you are selling through an online marketplace, you might be able to use their IOSS number. Ecommerce platforms like Shopify and Etsy might also have integrations that handle all the IOSS-related work for you.
How can SEKO help with IOSS?
At SEKO we can help you with IOSS registration and can also provide intermediary services for non-EU companies looking to take advantage of this simplification.
Contact us today to speak to one of our logistics experts for further information about our IOSS services.
Get in touch today: hello@sekologistics.com
IOSS Frequently Asked Questions
Who can use IOSS?
The IOSS can be used by any business selling goods to consumers in the EU, regardless of whether the business is located in the EU or outside the EU. The IOSS applies to businesses selling B2C and only for goods worth €150 or less.
Do you have to use IOSS?
It is not mandatory for businesses to use the IOSS, though it does help make the process of paying VAT easier and more streamlined.
Without using the IOSS, you would have to pay VAT manually by filing VAT returns for every individual country you ship your goods to. The IOSS allows you to file a single VAT return every month, reducing admin time.
