financial, analysis, accounting

E-commerce VAT Package: Let’s Get Ready for July 1st 2021!

PART 1 - THE NEW IMPORT SCHEME (IOSS) FOR EU AND NON-EU SELLERS

On July 1st 2021 the EU E-Commerce VAT Package(1) enters into force. 

EU and non-EU businesses are getting ready in order to get the most out of the new system of filing, collecting and paying VAT in the EU. 

The new system (which is optional) will be based on the One-Stop-Shop system (OSS), the “bigger” version of the Mini-One-Stop-Shop already in use for the suppliers of Telecommunications, Broadcasting and Electronically Supplied Services (TBE). 

The OSS consists of a platform that any business selling goods and services in the EU can sign up to and use in order to:

  1. register for VAT in only one EU Member State instead of registering in each Member State where the business sells goods and services
  2. account in the Member State of registration for the total VAT due in the other Member States

As to the VAT exemption at import for low-value consumer goods, PLEASE NOTE that the current 22 EUR exemption threshold will be abolished.

From July 1st, all goods imported in the EU will be subject to VAT.(2)

Today in this article we will focus on how the Import-One-Stop-Shop (IOSS) facilitates EU AND NON-EU ESTABLISHED IMPORTERS (suppliers or deemed suppliers)(3) selling LOW-VALUE CONSUMER GOODS (<150 EUR) DIRECTLY IMPORTED from THIRD COUNTRIES to FINAL CONSUMERS in the EU. 

Indeed, as from July 1st 2021, importers of low-value consumer goods may choose to use the new Import Scheme in order to:

  1. collect the VAT directly from the customer 
  2. declare and transfer monthly to each Member State the VAT paid by the customer via the Import One Stop Shop.(4)

The great advantage of registering with the IOSS is that the imported goods are immediately released for free circulation without any VAT due at the customs. 

VAT is paid by the customer to the seller that later transfers the amount to the each EU Member State through the IOSS. 

The Import Scheme applies to the sales where:

  1. the goods are directly imported from a non-EU territory (no stock in the EU)
  2. their value does not exceed 150 EUR
  3. the goods are dispatched or transported by or on behalf of the supplier to a customer residing in an EU Member State
  4. The goods are not subject to EU harmonized excise duties (like alcohol and tobacco products). 

The following Sellers selling low-value consumer goods are eligible for the Import Scheme: 

  1. Suppliers(5) ESTABLISHED in the EU 
  2. Suppliers NOT ESTABLISHED in the EU(6)
  3. Electronic interfaces ESTABLISHED in the EU
  4. Electronic interfaces NOT ESTABLISHED in the EU(7)

Businesses may already APPLY FOR THE IOSS – Pre-registration is open since April 1st 2021 – Here is a the PER-COUNTRY LIST OF CONTACT DETAILS to pre-register in each EU Member State.

All information about the new OSS can be found at this link 

We can discuss your needs over a first call
free of charge!

We are ready to assist you in registering with the OSS/IOSS and available to help with any query you may have concerning the new VAT E-Commerce Package.

Do not hesitate to contact us!
Footnotes:

1. These new rules have been brought about by the Directive 2017/2455 and the Directive 2019/1995 (VAT E-Commerce Directives) which have amended the VAT Directive 2006/112/EC.

2. The customs duty relief at import for low-value consumer goods remains in place.

3. The recent Directives introduced the concept of “Deemed Supplier”, which means that any electronic interface that facilitates the sale of consumer goods is regarded as liable for VAT in the EU and has the same rights and obligations for VAT purposes as the vendor. 

4. Importers shall keep records of all IOSS distance sales for a 10-year time in order to be able to show import evidence in case of audits by the EU tax authorities – See article 63c of the VAT Implementing Regulation 2019/2026.

5. For example, vendors who sell through their own online shop.

6. Non-EU sellers can use the Import Scheme directly (without appointing a representative) on the condition that they are established in a country with which the EU has concluded a VAT mutual assistance agreement. Otherwise, they will have to appoint an intermediary/tax representative established in the EU.

7. Non-EU Electronic interfaces can use the IOSS directly or through an intermediary/tax representative. See footnote 6.