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IOSS solutions for UK business with Ship24

The introduction of the new Import One Stop Shop system in Europe, as well as the new EU VAT tax rules, will have a considerable impact on UK businesses. Ensure you take advantage of the new system with seamless transition with Ship24.

IOSS solutions for UK business with Ship24

How will IOSS affect UK businesses?

New EU VAT rules have come into effect which will apply to all businesses both within and outside of Europe for sell to EU buyers. The new rules will also see the introduction of the new Import One Stop Shop (IOSS), which promises to offer full VAT transparency for buyers and sellers as well as faster delivery rates for businesses and marketplace who trade under the scheme.

While the new EU VAT rules apply to all businesses, registration for the IOSS scheme is optional with goods still allowed to be sent to the EU via other postage methods, such as Delivery Duty Unpaid (DDU). However, with the scheme offering multiple benefits for businesses, many are seeking to register for IOSS. Furthermore, due to the UK recently leaving the EU, making are wondering: do my UK businesses have to sign up for IOSS? Or searching for IOSS UK registration.

If a UK business does opt to sign up for the EU's new IOSS scheme, then unless it is established within the EU it will have to sign up via the Import One Stop Shop (IOSS) system via an IOSS fiscal intermediary. An IOSS intermediary is a fiscal representative which must be based in one of the EU member states and will be responsible for declaring and paying owed VAT of the companies they represent to the relevant tax authority in the EU.

This guide aims to give you all the information you need about UK Import One-Stop-Shop registration, including how and where to find an IOSS UK fiscal intermediary representative and how joining the IOSS scheme could benefit your business. Find all your IOSS UK related answers below. Also, if you are looking for a IOSS solution check out about the full IOSS solution offer from shipping sector experts, Ship24.

How will the new EU VAT rules affect UK businesses?

Under the new EU VAT rules, any imported sale of goods valued at 150 EUR or less will be liable for tax, following the ending of the 22-euro tax exemption threshold on June 30, 2021. The new IOSS rules also state that VAT must be collected at the point of sale by the electronic interface (business or marketplace where the sale took place), meaning that it is the responsibility of the seller or marketplace to declare, collect and pay VAT. The collected VAT must be paid to the relevant tax authorities via an IOSS fiscal intermediary (who will pay the owed VAT on a company's behalf) if they operate outside of the EU. Therefore, an IOSS representative a for UK business will need to be appointed.

The UK's exit from the European Union, dubbed Brexit, means that UK businesses that are not established within the EU must pay VAT through an IOSS intermediary if they want to access the benefits the scheme provides.

How will IOSS UK resident sellers sell to EU consumers?

Following Brexit, UK sellers are now considered non-EU residents and as a result, will need to register with an IOSS intermediary in order to use the IOSS system when making sales to the EU. They will also be required to meet various EU obligations, such as the declaration and submission of VAT reports from their total sales each month, under the IOSS.

IOSS UK sellers will need to keep a record of all sales for the past 10 years in case an investigation or audit is conducted by the relevant EU tax authorities, which can be done at any time. IOSS UK merchants must also comply with their IOSS intermediary terms and conditions in the event of an investigation by EU tax authorities.

Should UK businesses register for IOSS?

There are various implications of signing up for the IOSS scheme for businesses in the UK. Below is a list of the advantages which UK businesses may find from joining the IOSS scheme:

  • Single VAT registration and simplified payments: The new IOSS means that UK-based e-commerce businesses and marketplaces will only be required to register and pay VAT in one EU country or to one IOSS intermediary, no matter how many countries they sell goods to (applicable to all goods valued at or less than 135 British pounds, or 150 EUR).
  • Simplified VAT system: IOSS regulations will simplify the import process for retailers within the EU by standardizing imports EU-wide. No longer will businesses need to file lots of different VAT returns in multiple countries.
  • Marketplace e-tailers set to benefit: Under the new rules, liability for VAT collection will fall on the marketplace instead of the merchant, on all goods sold in the EU valued at 150 EUR or less. It also means that businesses can end all VAT registrations when switching to the new system.
  • Customer benefits: By requiring the VAT to be displayed and paid at the point of sale, the scheme not only offers full transparency for consumers but means they will not face any unexpected VAT payments on arrival to the UK, which should build more trust in UK sellers and provide a more positive post-purchase experience.
  • Fast-track delivery: The scheme promises to speed up shipments due to the fact that VAT will already be paid on the goods and therefore will require minimal processing at customs upon import.

What issues do IOSS UK registered businesses face?

There are some UK businesses that could be negatively affected by the new EU VAT rules, such as if they currently benefit from the 22 EUR tax exemption threshold if they are involved in the sale of goods exceeding 150 EUR. Aspects of the IOSS and EU VAT changes that could affect businesses are listed below:

  • End of the 22 EUR tax exemption: If a UK business only sells goods valued at 19 British pounds or less (or 22 EUR). According to current statistics, this means that the more than 25,000 UK business which falls into this category who want to take advantage of the new IOSS system will have to register for VAT for the first time. They can, however, still sell goods to buyers using postage methods such as Delivery Duty Unpaid (DDU), however, they face longer customs processing times and potentially higher import fees.
  • Added costs: Although many companies are registered and pay VAT in the EU, UK businesses will need to register with an IOSS intermediary company to meet IOSS obligations. Fortunately, Ship24 offer some of the most competitive IOSS intermediary services worldwide and
  • High-value goods cannot be sold under IOSS: The new scheme only covers goods valued at 135 British pounds or less (150 EUR). This means UK businesses will have to find another way of sending products, such as by DDU, which could put buyers off.
  • Vague guidelines: Lots of the finer details surrounding the IOSS system remain ambiguous, and the scheme has been expected to face some teething problems as it is rolled out. However, businesses are advised to get ahead by registering for the IOSS system to ensure that they can benefit from the advantages which are set in stone.
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