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EU solution to double taxation on IOSS VAT

Overcharged import VAT recovery via IOSS return proposal

The European Commission (EC) has proposed a solution to the problem of double taxation arising on the new Import One-Stop Shop process for declaring VAT on imports not exceeding €150.  It suggests allowing sellers or deemed supplier marketplaces to reclaim in subsequent returns any import VAT incorrectly collected at Customs.

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VAT charged incorrectly for second time on import

Following the 2021 e-commerce package, import VAT on B2C sales of import consignments not exceeding €150 should be charged by the vendor in the checkout. The vendor – or marketplace – then includes their IOSS number on the package to indicate to Customs that they do not need to charge import VAT.

However, there is a reported number of cases – perhaps 5% – where import VAT is incorrectly charged when it has already been levied in the checkout process. This may be because:

  • Seller does not include their valid IOSS number on the customs invoice or declaration
  • Customs is unable to validate the IOSS number.

Proposal to allow reclaim of paid import VAT

The EC is therefore proposing that sellers or marketplaces may reclaim any such double taxation through their next return. The seller or marketplace would also refund their customer when they have made the payment to Customs (via delivery agent etc). The advantages of this solution would be:

  • Follows common practise and Directive legal basis on being able to correct or offset VAT via VAT returns
  • It would provide a clear audit trail within the IOSS reporting ecosystem
  • The seller or deemed marketplace will have the data and processes to manage this correction efficiently, refund the customer and reclaim the double tax through their return

Our VAT Calculator tax engine can provide instant e-commerce sales calculations for your checkout, and VAT Calc’s single platform  VAT Filer  can accurately complete the IOSS with verified transactional data.


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