2025 ‘Facilitating marketplaces’ must take on EU import VAT reporting IOSS obligations as part of VAT in the Digital Age reforms
The VAT in the Digital Age (ViDA) package of reforms includes an obligation from 1 January 2025 for facilitating marketplaces to take on their sellers B2C import reporting via the Import One-Stop Ship (IOSS) return. This was introduced as optional for marketplaces in the July 2021 EU e-commerce VAT package.
The measure ties with one of ViDA pillars, extension of the OSS Single VAT Registration reforms. This includes marketplaces deemed supplier for EU sellers’ VAT obligations starting on 1 January 2025.
IOSS return simplifies €150 consignment EU import VAT reporting
Since July 2022, IOSS may be used by EU or non-EU sellers and marketplaces to declare the sales VAT charged on imported consignments not exceeding €150 to EU consumers. It coincided with the removal of the EU’s €22 low-value consignment relief goods import VAT exemption which seeks to level the playing field for EU online and high street retailers who must always charge VAT.
Note: IOSS is optional today, and sellers or marketplaces may consider the Special Arrangements with postal operators, express carriers and customs agents instead taking care of the VAT on €150 consignments. There are special IOSS Northern Ireland and UK rules.
Separately, the One-Stop Shop (OSS) return was launched at the same time with the withdrawal of the EU distance selling thresholds. This may be used as a single pan-EU VAT report for distance selling to EU consumers.
Ending the €22 import VAT exemption on low-value imports
Up until 30 June 2021, any seller could sell imported goods into the EU to EU-resident consumers VAT free if the value of the consignment did not exceed €22. Originally, this was to cut the administrative burden for tax authorities of having to register and administer lots of small transactions for relatively low tax revenues. However, with the boom in e-commerce, the unfair VAT tax break it creates at the expense of EU online or high street sellers and amount of VAT fraud it has attracted, the EU decided to scrap it.
Charging sales VAT consignments not exceeding €150 in the checkout
Since 1 July 2021, import VAT is due on all imported distance sales to EU consumers. The EU decided to require all sellers and deemed supplier marketplaces to instead charge sales VAT at the checkout on consignments not exceeding €150. So moving the import VAT collections from the customs border to the seller’s online checkout.
To avoid the requirement for EU or non-EU sellers to have to VAT register in each EU state where they have customers to report this VAT, the EU introduced on 1 July 2021 the IOSS registration and return option.
IOSS – single EU registration for all import €150
EU and non-EU sellers (and facilitating marketplaces) can chose to opt to register for a single monthly IOSS return to report their sales to EU consumers not exceeding €150 consignment value. EU sellers register with their home tax office; not-EU sellers can pick any of the 27 EU countries as their member state of identification. Note, most non-EU sellers will have to appoint an IOSS Intermediary to represent them for VAT.
Once they have been given their unique IOSS number, this should be marked on the customs declaration Check the IOSS invoicing rules which includes a simplified customs declaration for IOSS packages. This will ensure that customs officials are notified that import VAT has been collected, and will ensure speedy Green Channel clearance through the clearance process.
Monthly IOSS returns
Each month, IOSS registered sellers will have to complete a simple IOSS return. This will list all sales by country and by VAT rate (including sales by country reduced rates). IOSS and any due VAT must be submitted by 20th of the month following the reporting month. It is filed in the country of residence or member state of identification for EU and non-EU sellers, respectively.
Deemed Supplier marketplace IOSS
As well as sellers, facilitating marketplaces controlling their EU or non-EU sellers with customer terms & conditions, payments, delivery and / or payment ordering becomer responsible for import VAT on consignments not exceeding €150. They may register for IOSS too.
In the case of an audit for the deemed supplier marketplace, they may use the new SAF OSS schema which standardises the XML report to be supplied.
Register for IOSS – need an Intermediary?
When a marketplace wants to use IOSS, they must register with one of the EU member states’ tax authorities. For EU-resident marketplaces, this should be their domestic country. Non-EU marketplaces, including post Brexit UK platforms, they may nominate and ‘member state of identification’ to register in. Note, this may require them to appoint an IOSS Intermediary, a type of Fiscal Representative.
Once registered, the marketplace will be given an IOSS registration number. This is important for customs declarations (see below)
IOSS VAT compliance obligations for marketplaces
Marketplaces need to follow a number of rules to use IOSS. These are similar to the rules on sellers:
- For consignments not exceeding €150 where the marketplace is therefore the deemed supplier, VAT charges must be made in the checkout. VAT should be separately listed in the checkout prior to the sales
- A simplified customs declaration is required on all packages to show that VAT was charged online to the Customs authorities. This should include the marketplace’s IOSS number.
- Each month, marketplaces should complete and file IOSS return in their registered country to report all imported sales, and pay the VAT due.
- Work with the underlying seller of the good(s) to ensure that the information required for customs clearance in the EU, including the IOSS VAT identification number, reaches the EU customs where the goods will be imported to.
But how to calculate the €150 value? VAT Calc’s in real-time global Calculator and Auditor services produce instant and accurate tax calculations for the EU commerce package changes, as well are our Filerproduce automatic OSS or IOSS returns from the shared transactions.
To support the use of this regime marketplace IOSS recordkeeping rules are strict, including retaining transactional-level data for at least ten years. Marketplaces still retain the Special Arrangements option instead of taking on their sellers’ VAT obligations..