Introduction of Import One-Stop Shop (IOSS) for EU-bound eCommerce items
On July 1 2021, the European Union (EU) made important customs changes which affect businesses sending goods to EU countries. One was changes to Value-added tax (VAT) threshold.
The other was the introduction of Import One-Stop Shop (IOSS): a central electronic portal businesses can use to pay their VAT on the sale of imported goods to the EU. The introduction of IOSS is covered on this page.
Import of One-Stop Shop (IOSS)
To ensure a smooth transition to the new VAT system, the EU has created a central electronic portal to help businesses pay their VAT online. The IOSS simplifies VAT requirements for sellers of goods (including marketplaces) to buyers throughout the EU. It is for use by non-EU businesses selling low-value goods (up to €150 in value) to EU customers.
The IOSS allows you to declare and pay VAT on all sales of goods in a single electronic quarterly VAT return. You can offer your customers a transparent and simpler shopping experience by:
| Charges | Current payable | Payable from 1 July 2021 - With IOSS | Payable from 1 July 2021 - Without IOSS |
|---|---|---|---|
| Product value (including shipping) | Current payable €10 | Payable from 1 July 2021 - With IOSS €10 | Payable from 1 July 2021 - Without IOSS €10 |
| VAT (21% in Netherlands) | Current payable €0 (exemption) | Payable from 1 July 2021 - With IOSS €2.10 | Payable from 1 July 2021 - Without IOSS €2.10 |
| Customs fee | Current payable €0 (exemption) | Payable from 1 July 2021 - With IOSS €0 (settled by seller) | Payable from 1 July 2021 - Without IOSS €5-15 |
| Total cost | Current payable €10 | Payable from 1 July 2021 - With IOSS €12.10 | Payable from 1 July 2021 - Without IOSS €17.10-27.10 |
Impact on delivery process
Choosing whether to use the IOSS will impact the delivery process. If you don’t register, extra administration is required when importing parcels; and your customer will need to pay customs fees on arrival of the goods in their country, rather than being able to pay it all at the time of initial purchase through you. The parcel may take longer to arrive, and the longer your customer takes to pay the required fees, the longer the end-to-end delivery will take.
With IOSS
1. Online sale (all costs included)
2. Processing and shipping of the order
3. Processing by customs officials
5. Delivery to the door
Without IOSS
1. Online sale (all costs included)
2. Processing and shipping of the order
Delay
3. Costs (customs and taxes) paid by the customer
Delay
4. Processing by customs officials
5. Processing by last mile carrier
6. Delivery to the door
Preparing your business for the EU VAT eCommerce changes
It’s important to understand how these changes will impact your business. Please carefully read through the VAT rules available on the European Commission website. Read more about the EU VAT eCommerce changes
You will need to provide your IOSS registration number in the ‘Importers Reference Number’ field at the time of lodgement or label generation. We will then transmit this number for customs processing and VAT collection and processing via the European Union (EU) IOSS system.
Your IOSS number is 12 digits long, starting with IM followed by 10 numbers (e.g. IM1234567891). Please ensure you enter the number correctly. We do not validate the data, and the EU IOSS system will only recognise IOSS numbers that are in the correct format.
The IOSS registration number is checked and validated during customs clearance.. Any additional or incorrect characters included in the field will not match the data in the IOSS register, and your customer may be required to pay tax again.
From 1 July 2021, the EU will be removing the low-value VAT threshold for eCommerce items. This means all items sent to the EU, regardless of value, will be subject to VAT.
The IOSS is an electronic system which simplifies VAT requirements for sellers of goods (including marketplaces) to buyers throughout the EU. It allows businesses to:
- register for VAT electronically in a single Member State for distance sales of goods in the EU
- declare and pay VAT due on all these sales of goods in a single electronic quarterly return
For more information, please see the European Commission website.
It’s important to read more about the changes and assess the implications for your business. You can find more information on the European Commission website.
If you decide to collect and pay VAT via the IOSS, then:
- appoint an EU-established intermediary – a taxable person based in the EU who acts on your behalf to fulfil your tax obligations
- register and sign up to IOSS from 1 April 2021
- register for tax in any EU member country (registration is only required in one country for the entire EU)
- use the Importer Reference Field during lodgement to ensure we have all relevant tax information to pass onto the destination customs authority
- file a regular domestic VAT return quarterly via IOSS.
The introduction of IOSS is intended to simplify the declaration, payment and collection of VAT when sending goods to the EU. By registering in just one EU member state, your administrative process of paying VAT into EU is streamlined.
Additionally, goods sent by IOSS registered sellers will be checked on arrival into the EU then sent directly on to your customers, minimising customs delivery delays. If your business is not registered with IOSS, the goods cannot be sent onto your customers until the VAT has been collected from your customer. This may add delivery delays and pass the VAT obligation to your customer, as well as a manual handling fee to collect the VAT and duties.
Customers who purchase internationally from an eCommerce business outside the EU may opt to purchase from sellers who collect VAT at the time of purchase (in their shopping cart). This helps them to understand the total cost of purchase including delivery, duties and taxes up front.
If you don’t offer to collect VAT for customers at the point of purchase, they will continue to pay VAT on arrival of their goods. They will also pay a manual handling fee for all items sent into the EU – regardless of the value of the item. This may be a deterrent, particularly for customers who purchase low value items (<€22) and now need to pay VAT on these items, as well as any applicable manual handling fee.
You can use IOSS even if you aren’t registered as an EU business, but you need to register as a ‘non-Union taxpayer’ with the tax authority of any EU member state. You will then be able to file a regular domestic VAT return quarterly, like any EU e-commerce seller. You will be required to file in at least one EU member state. VAT incurred on imports may be declared in the IOSS as well.
You can register your business on the IOSS portal of any EU Member State from 1 April 2021. If your business is not based in the EU, you will need to appoint an EU-established intermediary to fulfil your VAT obligations under IOSS. The IOSS registration is valid for all distance sales of imported goods to buyers in the EU. You can start using the IOSS for goods sold from 1 July 2021.
Sellers registered in the IOSS need to apply VAT when selling goods destined for a buyer in an EU Member State. The relevant VAT rate is the one applicable in the EU Member State where the goods are to be delivered. Information on the VAT rates in the EU is available on both the European Commission website and on the websites of national tax administrations.
The marketplace will be responsible for registering for IOSS and it is likely they will provide the relevant information for you to pass on to Australia Post. Please check with your marketplace partner for more information.
You can use the IOSS if you are an online seller, your goods are worth €150 or less, and the goods are dispatched from outside the EU at the time of sale. Items over €150 will still need to have VAT (and customs duties) collected at the border.
Example A
- Business A sells goods worth €150 or less and ship their goods from Sydney, Australia.
- When an EU based customer purchases their items online, the total purchase price will include the applicable VAT at the point-of-sale (shopping cart). Business A will then declare the VAT in IOSS.
- Business A is now exempt from paying import VAT at customs, and their EU based customer does not have to pay additional manual handling surcharges to receive the goods in the destination country.
Example B
- Business B sells their items through a Marketplace.
- In this instance, the marketplace may collect the VAT and pay directly on their behalf.
- Provided the item is below €150, and the Marketplace is registered with IOSS to collect the VAT, no additional fees beyond point of purchase will be required by either the seller or purchaser.
- For consignments exceeding the €150 IOSS threshold, the import VAT must still be paid to customs.
- Your Marketplace will pay VAT on your behalf and will provide you with the IOSS number related to that purchase. This must be included as the importer reference number when lodging the customs declaration form.
When using the IOSS you will need to do the following.
- Provide all information required for customs clearance in the EU, including the IOSS VAT identification number in the consignment for your item.
- During your checkout process, inform the buyer of the amount of VAT to be paid (this should be displayed prior to the order being finalised). Australia Post’s international export tools can help you estimate duties and taxes prior to purchase.
- Ensure the collection of VAT from the buyer on the supply of all eligible goods with final destination in an EU Member State.
- Make sure that eligible goods are shipped in consignments not exceeding the €150 threshold
- On the invoice display the amount paid in Euros (if possible).
- Submit an electronic monthly VAT return via the IOSS portal of the Member State you registered with.
- Make a monthly payment of the VAT declared in the VAT return to the Member State where you are identified for IOSS.
- Keep records of all eligible IOSS sales and/or sales facilitated over 10 years.
Our international export tools can help you stay up to date with various shipping regulations and provide customers with accurate shipping information when they check out. These include a tax estimator that can be integrated into your eCommerce platform to help you estimate any applicable duties and taxes for your customers. You can access the suite of export tools via API integration or through our Parcel Send platform.
Learn more about international export tools
Your business will need to contact the relevant EU member state via IOSS for further investigation.
