Using the IOSS

If you are an online seller located outside the EU and you are not registered in the IOSS after 30 June 2021, but you sell goods that fall within the EUR 150 IOSS threshold, a buyer in the EU will have to pay the VAT and usually a customs clearance fee charged by the carrier, which might start to reduce your sales to EU consumers over time.

However, the value of using the IOSS for your shipments to the EU might depend on many considerations.

Possible impacts of the IOSS on sellers

There are several scenarios where the IOSS might affect online sellers.

Scenario

Description

Online sellers

An online seller registered with the IOSS will collect VAT at the point of purchase on orders that comply with the IOSS.

This is variable based on the type of goods sold and the country where a purchase was made. This information along with a seller’s IOSS number must then be passed to the carrier to help identify and validate where VAT should be collected at the point of import.

Electronic interfaces (marketplaces or platforms)

If an online seller sells goods through an IOSS-registered marketplace, the marketplace will collect VAT at the point of purchase on applicable orders.

This is variable based on the type of goods sold and the country where a purchase was made. This information along with IOSS number of the marketplace must then be passed (usually by the seller) to the carrier to help identify and validate where VAT should be collected at the point of import.

Shipping on behalf of others

If an online seller is sending goods on behalf of different sellers, or multiple online sellers are selling goods through multiple IOSS-registered electronic interfaces:

  • The correct IOSS number must be associated with each shipment where the IOSS will be used.

  • The carrier being used at the point of import must supports the IOSS.

Paying direct to tax authorities

Sometimes, an online seller might have its own arrangements with a tax authority whereby VAT will be paid directly to the authority instead of being collected by the carrier.

Any such arrangements are usually captured in a formal agreement between the customer, their carrier, and the relevant tax authority.

Direct injection

If online sellers inject shipments directly into a destination country, the customs process will occur at the point of import by the seller or its agent, and might include different data declarations for either of the following reasons:

  • Demonstrate use of the IOSS.

  • Facilitate the payment and/or collection of VAT at the point of import.

Using the IOSS number of an electronic interface or getting your own IOSS number

You might decide that that your business will have to make use of the IOSS from 1 July 2021 onwards, but you might be uncertain about whether your business needs its own IOSS number.

Deciding whether to get an IOSS number will depend on how your business sells to consumers located in the EU.

Sales method

Actions

Marketplace/platform only

Verify that the marketplace or platform has registered for the IOSS and use the IOSS number of the marketplace or platform for all of your EU sales through that electronic interface.

Direct sales only

Register for the IOSS and use the IOSS number assigned to your business for all of your EU sales.

Combination of direct and marketplace/platform sales

Use the correct IOSS number for each type of sale:

  • Use the IOSS number of your business for all direct sales to the EU.

  • Use the IOSS number of the marketplace or platform for all your EU sales through that electronic interface.

Accurate calculation of cross-border shipping duties and taxes

The following requirements are not specific to the IOSS but they highlight the need for accurate calculations of cross-border shipping duties and taxes.

Note

All of these requirements apply irrespective of the carriers you use or the customs agreements you might have.

Requirement

Description

Additional charges for shipping, insurance, or other costs

If additional charges to the consumer are levied at point of purchase, these must be specified in the data provided by the seller to the carrier.

Additional charges should be specified under one of the following categories:

  • Freight (shipping/delivery) costs

  • Insurance costs

  • Other costs

The values, if provided, will be printed on the commercial invoice or included in the paperless feed to the carrier.

Product values excluding VAT

Values of the goods in the parcels passed to carriers by means of manifests, declarations, or commercial invoices should exclude VAT.

Product descriptions and harmonised codes

Online sellers should ensure that an accurate product description is included in each declaration and that a full and complete harmonised code is provided.