Many changes are coming this July regarding VAT and e-commerce and all sellers need to be prepared accordingly in order to reduce any impact on their businesses. We already analyzed in our previous article the new One-Stop Shop scheme that will take place or rather its expansion from the previous One-Stop Shop that was in place.
Until now the European union operated with the low-value consignment relief in place which meant that no import VAT had to be paid for all goods that enter the European territory of a value up to 22€.
This rule will change starting July 2021 and every consignment that enters the Eu from a third country will be liable for import VAT.
This is why the Import One Stop Shop is being introduced.
Simply put the Import One-Stop Shop is the electronic portal businesses can use from 1 July 2021 to comply with their VAT e-commerce obligations on distance sales of imported goods. The IOSS allows suppliers and electronic interfaces selling imported goods to buyers in the EU to collect, declare and pay the VAT to the tax authorities, instead of making the buyer pay the VAT at the moment the goods are imported.
Both new schemes OSS and IOSS will help in Simplifying the VAT invoicing process while at the same time combating VAT fraud. This ensures fair competition for EU companies and the EU consumers will appreciate knowing that when buying goods online from outside or inside the EU, the VAT rate will be the same as for goods acquired in their home country.
The IOSS will be used for the importation of goods valued less than EUR 150 and it will simplify the declaration as well as payment of VAT of goods sold by distance sellers or electronic marketplace facilitating sales of goods.
When registering to the IOSS, online sellers or online marketplaces/platforms receive an IOSS VAT number. This IOSS VAT number is used by postal operators and courier services to declare goods upon importation to the customs authorities. They can do so in any Member State regardless of the destination of the goods. Customs authorities verify the validity of the IOSS VAT number and then the package can be delivered to the customer.
If a consignment consists of more than one item the total number of goods is being taken under consideration as the value of the consignment. The IOSS does not cover sales of goods that are subject to excise duties.
From 1 April 2021, you can register businesses on the IOSS portal of any EU Member State. If businesses are not based in the EU, they will normally need to appoint an EU-established intermediary to fulfil their VAT obligations under IOSS.
Global VAT Compliance can help you with your VAT obligations so you can focus on your expanding business. Contact GVC now and soon you will receive a VAT assessment from one of our VAT specialists.
You do not need to charge VAT on sales if: