On July 1, the EU tax reform officially came into effect! For sellers to consult the most IOSS and OSS-related issues, the green circle research policy to organize the hot dry goods, first of all, the following three situations for sellers to self-check:
■ Non-EU sellers selling via third-party e-commerce platforms do not need to consider IOSS and OSS.
■ EU sellers who sell through third-party e-commerce platforms do not need to consider IOSS, but do need to consider registering for OSS.
■ EU and non-EU sellers operating standalone sites will need to consider registering for IOSS and OSS.
Today, let's follow the editor to know more about IOSS.

Q1 Introduction and role of IOSS

As of July 1, 2021, the EU eliminated the exemption of imported goods up to a value of €22 from Value Added Tax (VAT). As a result, all goods imported into the EU from non-EU countries will be subject to VAT, regardless of their value. The Import One Stop Shop (IOSS) aims to facilitate and simplify the collection, reporting and payment of VAT on distance sales of imported goods up to a value of €150.
IOSS also makes the process easier for the buyer, who is only charged at the point of purchase and therefore does not face any unexpected costs when the goods are delivered. If the seller is not registered with IOSS, the buyer will have to pay VAT as well as customs clearance fees that are usually charged by the transporter.

Q2 Do I need to register for IOSS?

Simply put, for our cross-border e-commerce sellers, IOSS registration and declaration is applicable to independent sellers with single orders of goods valued at less than €150 (value excluding VAT and shipping costs), which are shipped directly from non-EU inventories to consumers in the European Union (EU). For orders over €150, IOSS is not applicable and tax will be levied at the time of import into the EU.
IOSS registration and reporting does not apply to sellers who facilitate sales through third-party sales platforms (e.g. eCommerce, eBay, amazon, etc.), as eCommerce platforms involved in the facilitation of sales will be considered as suppliers selling to EU consumers, and eCommerce platforms are responsible for VAT, need to register with IOSS and provide IOSS information to sellers.

Q3 How does IOSS work?

First of all, if the value of a single order is less than €150, and the goods are mailed directly from a non-EU country's inventory to an EU consumer, the seller is required to calculate and pay VAT according to the rate of the destination of delivery (the country where the EU buyer is located); the process of IOSS shipment is shown in the figure above.
Step 1: IOSS Registration: 1) EU businesses can register on the IOSS portal in the country of incorporation. 2) For non-EU businesses (UK i.e. other third country businesses), they will usually need to appoint a tax responsible person set up in the EU to fulfill their VAT obligations under the IOSS.
Step 2: The EU buyer (customer) places an order on your independent website and your goods are located in a third country stock outside the EU.
Step 3: When the EU customer completes the order and pays, the amount of payment includes the amount of VAT in the customer's country.
Step 4: The goods are shipped to the European Union via a logistics company (postal/express).
Step 5: The goods are declared at the customs of any country through the customs clearance agent of the logistics company.
Step 6: The EU Customs will automatically check the validity of the IOSS VAT information against the IOSS VAT database when it is received in the customs declaration database file. If the IOSS VAT number is valid, the name of the consignment is not a special product and the intrinsic value of the individual goods does not exceed €150, the customs will not charge VAT on goods imported via IOSS.
Step 7: After customs inspection, the consignment goods will be released duty-free (free of import VAT and customs duty) and delivered to the customer's destination address in the EU.
Step 8: The tax responsible person (EU company or tax responsible person appointed by a non-EU company) submits an electronic monthly VAT return through the IOSS portal of the IOSS registered country and hands over the corresponding VAT payment to the tax office of the IOSS registered country.
Step 9: Upon receipt of the tax return, the IOSS tax office will compare it with the totalized data submitted by the Customs to check whether the amount of duty-free import matches with the amount declared by IOSS. If there is a mismatch, the IRD will first consult the IOSS tax officer.

Q4 How do I verify the validity of my IOSS VAT number?

All IOSS VAT identifiers issued by the tax authorities of the EU member states will be made available electronically to all customs authorities in the EU. the IOSS VAT database identifiers are not publicly available. When the EU customs authorities receive the IOSS VAT information in the customs declaration database file, they will automatically check its validity against the IOSS VAT database.
Clearance agents (e.g. postal carriers, courier companies, customs agents, etc.) who declare goods to Customs do not and cannot check the validity of the IOSS VAT number.

Q5 What is a tax liable person (tax intermediary)?

The tax intermediary must be a taxable person established in the EU. It must fulfill all obligations under the IOSS Import Scheme for the seller or e-commerce platform that appoints it as the taxable person, including the submission of IOSS VAT returns and the payment of VAT on low-value goods imported for distance sales. However, the seller or e-commerce platform is still liable for VAT, including payment of VAT with the tax intermediary.
In practice, EU member state tax administrations will attempt to recover VAT from tax intermediaries, and if this attempt fails, EU member state tax administrations may attempt to recover VAT from commissioned independent sellers or sales platforms. It should also be noted that a tax intermediary is not necessarily a customs clearance agent.

Q6 How does IOSS file tax returns?

IOSS is a monthly return and the deadline for filing and paying VAT to the tax office where the IOSS is registered is the last day of the month following the filing period.
The IOSS VAT return will contain the total value of the goods sold in the corresponding destination Member State, the corresponding VAT rate and the total amount of VAT to be paid.
The tax responsible person is required to submit a monthly IOSS return to the IOSS registration office every month. Special attention should be paid to the fact that the sales record data provided by the seller to the tax responsible person needs to be consistent with the data declared using ioss clearance.
Import VAT is paid by the seller to the tax responsible person's bank account and by the tax responsible person to the tax office.

Q7 Concluding Remarks

Independent Sellers using IOSS are required to ensure compliance with the VAT as follows:
Provide customs clearance agents (e.g. postal carriers, couriers, customs agents, etc.) who declare goods at the EU border with the information required for customs clearance in the EU, including the IOSS VAT identification number;
Shows the amount of VAT paid by the customer in the EU when the customer completes payment for the order;
Ensure that VAT is charged at the VAT rate applicable in the country where the EU customer is located;
Ensure that the value of a single consignment does not exceed €150;
The price paid by the buyer in Euros may be shown on the invoice;
Submit electronic monthly VAT returns through the IOSS portal in the IOSS registered country;
The VAT declared in the VAT return is paid monthly to the tax office in the country of registration of the IOSS;
Retain all eligible IOSS sales data, reporting and financial records for 10 years;
If you still have any questions about IOSS, you are welcome to scan the code and add the editor to communicate with us. You can also collect and feed back your urgent tax problems to the tax consultant of Green Circle, we will try our best to answer your questions and communicate with the platform to solve your difficulties if necessary.