The EU e-commerce VAT package has now come into force on 1 July 2021, including the introduction of the new pan-EU Import One-Stop Ship (IOSS) return.
May 2023 update: The EC has proposed ending the €150 VAT threshold on consignment stocks from March 2028.
These are 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 coincides 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, 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 has been launched 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.