New EU VAT reforms are being introduced in 2021, effective from July 1. The reforms will particularly affect business-to-consumer (B2C) e-commerce sellers and marketplaces due to the removal of tax exemption for low-value goods (under 22 euros).
From July 1, 2021, all imports into the EU classed as all commercial goods are subject to VAT. The VAT amount that e-commerce sellers and marketplaces will be charged will depend on which EU member states they sell goods in. However, under the IOSS scheme, they will only be required to pay for all VAT owed in one EU member state, where their IOSS intermediary is registered (who will pay it on their behalf). Ship24 offers full IOSS solutions, including registration within as little as 3 days and ongoing compliance support through our dedicated team. Find out more about our all-encompassing services and our competitive prices by clicking the button at the top of the page and get an IOSS number in as little as 3 working days.
Please note, the new EU VAT rules stipulate that "electronic interfaces" marketplaces and platforms will be the supplier for VAT purposes.
IOSS is designed to make the sales and import of low-value B2C goods faster and cheaper for marketplaces and customers. Not only does paying VAT upfront mean the purchasing phase is more transparent, but it should also help speed up customs clearance, resulting in faster delivery times.
Under the new IOSS rules, low-value goods mean all shipments costing 150 euros or less, which includes the total value of a single package, such as the cost of transportation, insurance, and VAT. Please note that this excludes some products which are subject to consumption tax (such as alcohol and tobacco).
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The benefits of using the IOSS scheme for marketplaces include:
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From July 1 onwards, some marketplaces will be responsible for collecting, declaring, and paying owed VAT. The IOSS marketplace will be registered under the IOSS scheme and merchants who sell goods on these marketplaces will not be responsible for paying the VAT. Instead, the VAT will be displayed at the point of sale for the customer, which upon purchase, will be collected by the marketplace.
This will apply to all consignments costing 150 euros or less imported into the EU, where the sale was facilitated by an online marketplace.
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VAT is can be collected on e-commerce transactions made on marketplaces by one of two methods:
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The use of IOSS registered marketplaces has multiple benefits for businesses, including speedy delivery times, purchase and tax transparency, and the avoidance of unexpected customs fees and processing delays, all of which will improve the post-purchase experience of customers.
If a marketplace has registered for the import one stop shop scheme, businesses selling through the platform must provide the marketplace's IOSS number to the customs declarant, which will be the logistics or courier handling the delivery of the shipment.
Please note: If your business is using multiple marketplaces to sell goods to EU buyers, you should keep a clear record of all sales in case of an EU audit. These records should show all IOSS numbers in relation to each relevant sale and this information should be available to the customs declarant. IOSS is ultimately designed to make eCommerce easier for businesses selling to consumers within the European Union, especially marketplaces and online platforms.
The Import One-Stop-Shop scheme is only for consignments valued at 150 euros or less 130 or equivalent in the consumer's country)
Therefore, if a marketplace or online seller receives several orders from a customer which total more than the maximum 150-euro amount (and are dispatched in the same order), IOSS will not apply. IOSS covers the total cost of consignments, rather than individual items.
Please note: IOSS does not cover items that are subject to excise duties such as tobacco.
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Distance selling thresholds will be removed as part of the EU VAT overhaul in 2021. As of July 1, VAT will not only apply to intra-community distance sales with turnovers of over 35,000 euros per year, or 100,000 to Germany, the Netherlands, and Luxembourg over the same period.
The mandatory change will affect any business carrying out intra-community distance sales (which means where goods are sold and the sale involves a company transporting them from one member state to consumers in another), regardless of whether they opt to use the new IOSS or otherwise. Please note, any business-to-consumer service sale subject to destination VAT will be reported through IOSS.
The new EU VAT rules will also mean the end of the low-value consignment relief (LVCR), which gave tax exemption for all imports valued at 22 euros or less. This new rule aims to create a level playing field for domestic and non-domestic sellers.
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You can still track any parcel globally ordered from a marketplace using the Import One-Stop-Shop system, such as Amazon, eBay or Etsy on the Ship24 website. Universal tracking is simple with Ship24. You don't need the IOSS number or any other information regarding the VAT payment method, you just need the package tracking number to begin tracking your parcel at every step of its journey.
Businesses looking for premium parcel tracking services can also sign-up for our range of professional, best-in-class parcel tracking with the Ship24 tracking API and webhook options.