Skip links

EU Import One-Stop Shop IOSS VAT return – 1 July 2021

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.

Update: EU IOSS double taxation solution is due in February 2022

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.

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

Leave a comment