The Import One Stop Shop (IOSS) is a new regime which the European Union (EU) introduced in 1 July 2021 for the declaration and payment of VAT on distance sales of low value goods imported from non-EU countries or territories.
From 1 July 2021, the VAT exemption for the importation of goods into the EU with a shipment value not exceeding €22 has been removed. VAT is due on all commercial goods imported into the EU regardless of their value. Import duties for shipments with a value not exceeding €150 will continue to be exempted.
For importation of goods with a shipment value not exceeding €150, suppliers can elect to use IOSS to report and pay the VAT.
If IOSS is used, VAT is not paid at the time of importation of eligible goods into the EU. VAT is paid by the customer as part of the purchase price (at check-out).
The IOSS can be used by suppliers selling goods which meet all of the following conditions:
For goods sold through online marketplaces, the suppliers cannot use their own IOSS.
Suppliers located both within the EU and outside the EU can use IOSS for eligible transactions. Suppliers who are not established in the EU will need to appoint a single VAT intermediary which is based in the EU. Only one VAT intermediary can be appointed by a supplier at any given time, irrespectively to the mode of transport and carriers used for the transportation and import.
The use of IOSS is not mandatory.
However, if IOSS is not used, import VAT is due upon importation of the goods into the EU. Your logistics/customs agent will pay the import VAT to the customs authorities, and then recover it from either the customer or you. Additional handling fees will then usually arise. Additional VAT compliance burden may also arise if the seller sells goods under Delivered Duty Paid (DDP) terms.
The seller can use a single IOSS registration to report and pay the VAT due on all sales covered by the IOSS regime. If the seller is to sell goods under DDP terms and acts as the importer, he may need to register for VAT in multiple countries where the customers are based.
The IOSS is designed to enable quick release of the goods by the customs authorities as no VAT is payable upon importation. This will result in a speedy delivery of the goods to the customer.
Using IOSS also simplifies logistics as the goods can be imported into the EU in any Member State, regardless of the Member State where the goods are ultimately shipped to. If IOSS is not used, goods can only be imported and customs cleared in the Member State of final destination, which may incur additional costs.
At the time of purchase, the customer will see the full cost of the goods and pay a VAT inclusive price. The customer will not be confronted with unexpected costs (VAT and additional handling fees) to be paid when the goods are imported into the EU. This improves the customer experience and reduces rejected products.
collect from the customer the VAT on supplies of all eligible goods dispatched to the EU (meeting all IOSS conditions);
prepare the eligible goods to be shipped in consignments not exceeding EUR 150 in value;
(recommended) show the VAT paid by the customer in EUR, as at the date of payment acceptance, on the VAT or commercial invoice accompanying the goods for customs clearance;
provide your IOSS number to your logistics provider, to avoid import VAT being charged upon importation. Your logistics provider will then provide this number to customs via the customs declaration. You should only use your IOSS number for imports of eligible goods sold on your own website. For goods sold via online marketplaces, you should follow the instruction provided by the market-places;
submit a monthly IOSS return to the Member State of identification for all the eligible supplies of goods sold to customers in the EU (KPMG IOSS compliance services can cover the preparation and submission of the monthly IOSS return);
make a monthly payment to the Member State of identification of the VAT due as declared in the IOSS VAT return (this payment will effectively need to be made to your VAT intermediary, KPMG provides monthly payment instructions if you sign up for our IOSS compliance services); and
keep records of all eligible IOSS sales for 10 years to cater for potential audits by EU tax authorities.
The fee for the annual IOSS compliance, including VAT intermediary services and the IOSS registration (if needed), is as follows:
Up to 500 packages in a 12 month period
Up to 2500 packages in a 12 month period
Unlimited packages in a 12 month period
Up to 5 packages, plus €2 per additional package
*plus €70 one time registration fee