The effectiveness of IOSS
The Import One-Stop Shop (IOSS), a new VAT scheme developed and executed by the European Commission from July 1 2021, enables e-commerce businesses to comply with new VAT obligations on distance sales of imported goods in the EU.
IOSS simplifies the process of VAT declarations and payments for goods that are imported into the EU, and are below 150 EUR value. One of the benefits of IOSS is the transparent pricing at checkout – buyers are charged the VAT only at the moment of purchase and therefore do not incur additional fees afterwards.
According to the first surveys conducted by E-commerce Europe, the IOSS scheme has provided benefits to e-commerce sellers, but it also needs to be improved as e-sellers encounter issues such as: double taxation, IT functioning, different tax regimes and invoicing methods among the EU Member States.
Both Marketplaces and eCommerce sellers experienced the issue of double taxation on several occasions. This resulted in VAT being collected twice, once under IOSS at the moment of sale and once again at the moment of importation.
Each of the member states have their own infrastructure to facilitate IOSS compliance. As a result, the IOSS VAT return documents and online filing sheets have different formats depending on the country. This issue has caused logoffs and entry errors during the filing process.
Different TAX regimes
In the same manner as mentioned above, each of the EU Member States has its own invoicing rules and methods which complicates the IOSS process and needs to be addressed by the European Commission.
IOSS so far has proven to be beneficial for sellers importing in the EU. The OSS and IOSS schemes are the major EU VAT reforms that took place only a few months ago so they need further refinement at both the EU and a country level.
Global VAT Compliance offers IOSS and OSS registrations as well as advisory on VAT in relation to the new EU schemes.