1. The EU VAT exemption for B2C* goods below €22 does no longer exist. VAT must be charged at the point-of-sale for consignments below €150. This VAT may be declared and paid via a new submission, the ‘Import-One-Stop-Shop’ (IOSS)
2. The existing EU Customs Duties exemption for most goods not exceeding €150 will remain in place. Please see the graphic below as an example
From July 1st 2021
*IOSS is strictly B2C only
- IOSS can apply
- Formal clearance
- Customs clearance fee
- IOSS will not apply
- Formal clearance
- Customs clearance fee
- Duties
3. IOSS is not compulsory but it is the most convenient way to manage the new VAT obligation
4. What Determines the All-Important €150 Cut Over?
The value of the product itself is referred to as the intrinsic value; this value excludes transport (shipping rate / freight)or insurance costs. Multiple parcels being shipped to the same buyer can still qualify for IOSS if the total intrinsic consignment value of the parcels is below €150 threshold
5. How is Import VAT Calculated?
VAT is still applicable on transport & insurance costs so these costs should be stipulated separately on relevant data feeds and documentation(commercial invoice), however these costs can be excluded from the IOSS threshold value of €149.99 per consignment. Please see below examples from the EU Commission illustrating how intrinsic value can be declared to customs
How to Determine the Intrinsic Value
Example 1:
Invoice indicating total amount of the price paid for the goods not split between net price of the goods and transport charges. VAT amount indicated separately
In this example, transport costs are not mentioned separately in the invoice and therefore cannot be excluded. However, the net price of the goods is not exceeding €150 and therefore, IOSS can be used and no VAT or customs duties is levied at importation
Example 2:
Invoice indicating total amount of the price paid for the goods split between net price of the goods and transport charges. VAT amount indicated separately.
In this example, transport costs are mentioned separately in the order/invoice. As such, transport costs are excluded from the intrinsic value. The intrinsic value of the goods is not exceeding €150 and therefore, IOSS can be used and no VAT or customs duties is levied at importation. To be noted that VAT is applied on the total value of the sale (e.g. the €160 value of the goods and the transport charges)
6. What VAT rate should be used at point-of-sale?
The correct VAT rate is the one applicable to your customer’s country of residence. You can use the delivery address of your customer to identify the country of residence. Most goods are subject to the standard VAT rate, however certain goods are subject to reduced or nil VAT rates, depending on the type of products. Please check with your VAT specialist to confirm if IOSS will accommodate the reduced rate.
