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EU 2022 fixes for B2C e-commerce OSS and IOSS

6 months after e-commerce VAT package, reforms needed to remedy faults; mandating IOSS option; withdrawal of €150 IOSS threshold; extension of OSS to all B2C transactions and single VAT registration

The new EU One Stop-Shop (OSS) and Import One Stop-Shop (IOSS) returns were introduced from 1 July 2021 to help reduce the VAT registration and compliance obligations with the e-commerce VAT package reforms.

Whilst a largely successful launch, the new pan-EU reporting is under scrutiny for a number of fault lines.  The EU and its VAT consultation groups are looking at fixes to remedy these. Following discussions with EU states in November 2021, the European Commission is planning to issue suggested remedies to the OSS and IOSS difficulties listed below in early 2022. Additionally, the following longer-term topics will be considered:

OSS and IOSS technical difficulties

  1. Double Taxation: EU IOSS double taxation solution is due in February 2022. This when VAT is incorrectly charged twice on an B2C imported low-value consignments now exceeding €150. Firstly, the sellers or deemed supplier marketplaces charges VAT at the point-of-sale. However, a second charge is then incorrectly charged at customs when there is no adequate acknowledgment of the first charge. A practical solution being evaluated is to report refunds via subsequent IOSS returns as a deduction against VAT due. This would be attractive:
    • a simple reconciliation between the IOSS return and IOSS report would be possible
    • The seller or marketplace receives the refund, and can manage the refund to the customer
  2. Fraudulent misuse of IOSS numbers. As anticipated in the design of the IOSS reporting regime, there is signs of sellers fraudulently listing a wrong IOSS number on imported packages without having correctly charged import VAT in the checkout. The EC will present ideas to remedy this issue in early 2022.
  3. Refunds on returns: It is still not transparent in some countries how the seller or marketplace may make a reclaim for the VAT charge where imported goods under the IOSS scheme are returned.
  4. Customs rules on B2B small value consignments. Under the EU’s Union Customs Code the rules under the right customs office to release into free circulation low value consignments sold on a B2B basis (Article 221(4) UCC-IA) require further clarification.

Mandate IOSS and remove of Special Arrangements. Withdrawal of €150 threshold?

In 2022, the EC will also carry out a full evaluation of the e-commerce package launch.

This will be incorporated into the VAT in the Digital Age proposals.  Top of the list of possible changes will be the removal of the Special Arrangements exemption from using IOSS reporting. This enables sellers or deemed seller marketplaces to leave VAT collections on low-value consignments to couriers or postal services. This exemption was granted to ensure smaller sellers would not be overburdened by IOSS compliance. But is has potentially left open some opportunities for errors or fraud on imports.

EU VAT reforms

Reform (click for details) Update
2025 VAT registration thresholds equivalence foreign businesses On track
Virtual events VAT rule changes Agreed
2024 Payment providers' seller transaction reporting and bookkeeping obligations On track
Digital Reporting Requirements (DRR), e-invoicing and live transaction reporting Implementation of VAT in the Digital Age?
2023 DAC 7 - marketplace reporting obligations on sellers' activities On track
Financial Services VAT exemption reform proposals Consultation complete; proposal 2023
Tour operator margin scheme VAT reforms EC undertaking fresh review
2022 EU definitive VAT system Member states not agreed on format
EU reduced VAT rate freedoms Enter into force 6 April 2022
IOSS reforms to prevent double taxation Proposals early 2022
VAT in the Digital Age proposals On track for Q3 2022 detailed proposal
Single EU VAT registration - extension of OSS for B2B and B2C On track for Q3 2022 detailed proposal
Proposal for VAT treatment of the platform economy On track for Q3 2022 detailed proposal
VAT Gap Initiative Q3 2022
2021 One-Stop-Shop (OSS) single EU VAT return In effect
Ending €22 import VAT exemption; new IOSS return In effect
Marketplace deemed supplier EU VAT reforms In effect
2020 EU four Quick Fixes for VAT In effect
Tax authorities anti-VAT fraud cooperation In effect
Tax Action Plan - 25 VAT and other tax reforms roadmap See 'VAT in the Digital Age' and others
2019 Simplification of e-services VAT compliance and thresholds In effect
Single and multi-use vouchers In effect
2018 Lower e-book and publications VAT rates In effect, although not all EU states have adopted the option
EU Generalised Domestic Reverse Charge VAT Mechanism In effect, although no country has adopted this voluntary option
2015 B2C electronic services VAT reforms - MOSS return In effect

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