The Import One-Stop Shop (IOSS) is a vital tool for businesses outside the European Union (EU) that want to sell products directly to EU customers (B2C). Introduced as part of the EU's e-commerce VAT package on July 1, 2021, the IOSS simplifies the declaration and payment of VAT for goods valued at €150 or less. If you’re shipping to EU customers and want to avoid unnecessary customs delays and fees, understanding how IOSS works is crucial.
What Is IOSS?
IOSS is a VAT collection system designed to streamline the import process for goods sent from outside the EU, to EU customers. It applies to goods with a value up to €150, excluding excise goods like alcohol or tobacco. By using IOSS, sellers can collect VAT at the point of sale, allowing for a smoother and quicker customs process upon the goods' arrival in the EU.
When can I use IOSS?
- The goods are being shipped directly from outside the EU to a customer within the EU.
- The goods are not subject to excise duty
- It is a B2C transaction (B2B do not qualify for IOSS)
- Intrinsic value of the consignment must be less than or equal to €150
- Note: parcels going to the same buyer on the same manifest (truck load) will be totaled and the value must be less than €150 to use IOSS.
Key Benefits of IOSS:
Simplified compliance: IOSS is an optional, simplified process that enables you to ship to all 27 EU member states with just one registration.
Reduces administration: IOSS simplifies the process of VAT reporting by consolidating VAT payments into a single monthly return, regardless of the number of EU countries the business ships to.
Transparent pricing: Customers see the total cost (including VAT) at checkout, reducing surprises.
How to Calculate the €150 EUR Threshold
Understanding the €150 EUR threshold is crucial to determining if your goods qualify for IOSS.
Intrinsic Value
- The €150 EUR threshold is based on the intrinsic value of the goods.
- Intrinsic value refers to the price of the goods themselves.
- This excludes transport, insurance, and other costs.
- For example, if you sell a product for €140 and charge €20 for shipping, the intrinsic value is €140.
Which IOSS number should I use?
Scenario 1:
- The Seller is deemed the Supplier & VAT Collector
- The seller charges their customer VAT at the point-of-sale (seller’s own website)
- The seller will declare the VAT via their own EU establishment or their VAT intermediary
- The seller will send their IOSS number on the data feed to MHI
Scenario 2:
- A Marketplace becomes the deemed Supplier & VAT Collector
- A Marketplace: Online platform, portal or similar means
- The marketplace charges the customer VAT at the point-of-sale
- The marketplace will declare the VAT via their own EU establishment or their VAT intermediary
- The seller will send the marketplace’s IOSS number on the data feed to MHI
NB: If you are solely selling via a Marketplace that is IOSS registered then there will be no need for you to register for IOSS. However, some Marketplaces may not be registered so it’s important to check with the Marketplaces you are utilising.
How to get set up
Get Registered
Once you're registered, you'll receive a unique IOSS identification number.
This number must be included on all packages valued at €150 or less that are shipped to the EU.
Calculate VAT at Checkout
To use IOSS, you must calculate and charge destination VAT rate at the point of sale.
File Your Returns Monthly
IOSS returns must be filed monthly.
If your business is based outside the EU, you may be required to appoint an Intermediary to manage the process.
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