The new EU VAT e-commerce package – Implications for low-value importers

31 March 2021

From 1 July 2021, low-value consignments of €22 or less imported into the European Union (EU) will no longer be exempt from import VAT. Instead, VAT will be charged on all shipments entered into the EU regardless of the value. However, the exemption threshold for import duty will remain unchanged at €150.

As with the current rules, any import VAT due will be the liability of the named importer. 

Alternatively, from 1 July 2021, rather than have import VAT charged on these low-value consignments, you (the seller) could opt to charge the customer VAT at the point of sale if sold directly via your website. This means that you will charge VAT at your customer's own country’s VAT rate and pay this via a new Import One-Stop-Shop (IOSS) VAT return. 

The IOSS can only be used for consignments with a value of €150 or less.

Import One-Stop-Shop

The IOSS is an electronic portal that allows you to declare and remit the VAT on sales of low-value goods imported and sold to buyers in the EU. It can only be used if:

  • The value of the imported goods is €150 or less
  • The goods are located outside the EU at the time of sale and dispatched to private individuals in Europe

Note: The threshold of €150 does not apply to excise goods and VAT registration in each country will be required in this instance. 

The new IOSS aims to create a swift, efficient and transparent import process for both customers and suppliers. Under the current system, buyers of goods over €22 are liable to pay import VAT if the supplier does not introduce and clear the low-value goods into the EU prior to the sale. This often comes as a surprise to the customer, which results in a poor customer experience and sometimes a loss in revenue if the customer decides to return the goods. 

By registering for the IOSS, you will be able to provide buyers with full cost transparency by charging the VAT at the point of sale. In addition, the sale is expected to benefit from a reduced customs clearance time that could mean a faster delivery time to customers. 

Registering for the Import One-Stop-Shop 

Registrations for the IOSS are opening in April 2021 and if you’re a seller established:

  • In an EU Member State - You will need to apply for the IOSS in the country where you’re established. 
  • In a non-EU country - You will be required to appoint a VAT intermediary and will register in the intermediary’s country for the IOSS. 

The VAT intermediary is a taxable person established in the EU and will be responsible for declaring and paying VAT on behalf of the non-EU seller.

Please get in touch with Fiscal Solutions to find out more about our VAT intermediary service. 

New responsibilities for Online Marketplaces 

In line with the introduction of the IOSS, all online marketplaces such as Amazon and eBay will become liable for collecting VAT on all sales of imported low-value goods under €150, facilitated through their website. This means that your obligation to charge VAT is removed. Instead, you may be required to include the marketplace’s IOSS identification number on the import documents to ensure the import tax and customs duty is not charged at clearance into the EU.

Are you trading globally? Whether you require basic VAT advice or specific VAT compliance support, Fiscal Solutions can help. Our team of multi-lingual experts are knowledgeable in all the different VAT rules in Europe and around the world.

We help you simplify today’s complexities and address tomorrow’s challenges. The values we represent, and our consistent advice, mean you can trust Fiscal Solutions to do the right thing – for you and your organisation.

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