IOSS For EU Ecommerce Shipments: What's It All About?

If you're an ecommerce seller based outside of the European Union (EU) and sell goods to customers within the EU, you may be required to register for the Import One-Stop Shop (IOSS) scheme. The IOSS was introduced on 1 July 2021 as a new system to simplify and streamline VAT obligations for ecommerce sellers. In this article, we'll explore how ecommerce sellers can navigate the IOSS requirements in EU countries.

Firstly, it's worth noting that the IOSS scheme is optional. However, it is highly recommended for sellers who sell low-value goods (less than €150) to customers in the EU. Under the previous system, these sellers were required to pay VAT at the point of entry into each EU country. This resulted in lengthy delays and higher costs for both sellers and customers. With the IOSS scheme, sellers can pay VAT at the point of sale, which means goods can be delivered to customers more quickly and at a lower cost.

To register for the IOSS scheme, ecommerce sellers must either appoint a local intermediary or register directly with the tax authorities in an EU member state. The local intermediary option is often the easiest and most cost-effective solution, particularly for sellers who do not have a physical presence in the EU. A local intermediary can handle the IOSS registration and filing requirements on behalf of the seller. The intermediary will also be responsible for paying the VAT due on the seller's behalf.

When using a local intermediary, sellers should be aware that there may be fees associated with the service. These fees will vary depending on the intermediary and the level of support required. It's important to shop around and compare prices before committing to a local intermediary.

In addition to the intermediary fees, there may be accounting costs associated with the IOSS scheme. Sellers will need to keep accurate records of all sales made to customers in the EU, including the value of the goods sold and the VAT charged. They will also need to file a monthly IOSS VAT return and pay any VAT due. These additional accounting requirements may incur costs for sellers who do not already have a system in place.

Finally, it's worth noting that the IOSS scheme only applies to goods sold directly to customers in the EU. If you sell goods to businesses or use a marketplace, you may still be required to register for VAT in each EU country where your customers are located. This can be a complex process and may require specialist advice.

In summary, the IOSS scheme offers a simplified and streamlined VAT solution for ecommerce sellers selling low-value goods to customers in the EU. Using a local intermediary can help reduce the administrative burden and costs associated with the scheme. However, sellers should be aware of the fees charged by intermediaries and the additional accounting requirements of the scheme. If you're unsure whether the IOSS scheme applies to your business, it's important to seek specialist advice.