The Import One-Stop Shop (IOSS) is set to come into force this summer under sweeping changes to EU VAT law. If your business supplies goods to consumers in the single market, this is what you need to know.
What is the Import One-Stop Shop?
The IOSS is a new electronic portal that can be used by businesses from 1 July 2021 to comply with their VAT e-commerce obligations on distance sales of imported goods.
It comes as the EU abolishes the rules waiving import VAT on commercial goods of a value up to €22, meaning all commercial goods imported into the EU from a third country or third territory will be subject to VAT irrespective of their value.
The IOSS can be used for business to consumer (B2C) sales where the goods are valued at €150 (£135) or less.
What are the benefits of the IOSS?
The new service will allow suppliers selling imported goods to buyers in the EU to collect, declare and pay VAT to the tax authorities in one single location.
Under current legislation, the buyer must pay VAT the moment the goods are imported into the EU.
It means that the buyer will not be faced with surprise fees when the goods are delivered.
How will the new rules impact UK traders?
At present, UK businesses (except those in Northern Ireland) selling physical goods to consumers in the EU must register for VAT in the Member State the goods are being imported. This creates considerable administrative challenges and limits international sales growth.
But from 1 July 2021, traders can register with the IOSS in a single Member State and be covered in the whole of the EU – much like the existing Mini One-Stop-Shop (MOSS) for B2C digital services.
Businesses in Northern Ireland remain subject to EU VAT law under the terms of the Withdrawal Agreement.
According to the EU tax authorities, the changes could save businesses up to €2.3 billion (£1.9 billion) a year in compliance costs.