A complete IOSS solution for all new EU VAT obligations

What are the new EU VAT tax rules with the IOSS system?

From 1 July 2021, the value-added tax (VAT) exemption on the importation of goods into the European Union's twenty-seven countries will change. Where previously goods valued at 22 euros and less could be imported tax-free under the tax exemption rule, now all goods imported will be subject to EU VAT tax, regardless of value. This page will discuss the new EU VAT rules and how the EU VAT system works in practice.

The Import One Stop Shop (IOSS system) is a new scheme which aims to benefit businesses who will be affected by the changes, particularly eCommerce and distance sellers outside of Europe. Under IOSS. companies can cover EU-wide VAT in a single payment each month either directly if established in the EU or via and intermediary if established both in or outside of the EU. The IOSS system also means faster delivery times, due to the fact that VAT will be prepaid by customers using the scheme so parcels can be instantly released by customs. There are more benefits about joining the scheme, check out what Ship24 can offer you on our dedicated IOSS page or chat to one of our team in the box at the bottom right!

What are the EU VAT rates?

The EU VAT rule is a general tax that applies to goods and services that are bought and sold for use or consumption in the European Union (but maybe vary as far as percentage between each country). The tax is applied upon the import of products, mainly so the market is fair for EU producers and so they can compete on equal terms with other international suppliers.

The EU VAT rules covers all 27 member countries of the European Union. However, buyers and sellers should note that EU VAT rates vary between member states, and that the VAT paid on orders will depend on the country in which the seller is selling the goods. For instance, if you import the product into Germany but sell the products in Spain, you will pay the VAT amount as set by Spain. As part of the EU VAT changes, a simplified VAT payment service has been introduced called the Import One-Stop-Shop (IOSS). The IOSS means that businesses can register in one member state and pay all the VAT owed through sales via the one state. Businesses established within the EU can register directly for the One-Stop-Shop, but businesses established outside of the EU will need to appoint and IOSS intermediary service which is based in the EU in order to pay VAT on their behalf.

Ship24 offer full IOSS intermediary solutions including registration and ongoing EU compliance, as well as support from our best-in-class team. If you are looking for an IOSS intermediary, look no further than the shipping sector experts and get seamless transition for your business into the benefits of IOSS.

What is the EU VAT difference between member countries under IOSS?

The standard VAT rate in Austria, is 20%, Belgium is 21%, Bulgaria is 20%, Croatia is 25%, Cyprus is 19% the Czech Republic is 21%, Denmark is 25%, Estonia is 20%, Finland is 24%, France is 20%, Germany is 19%, Greece is 24% and Hungary is one of the highest at 27%.

The standard VAT rate in Ireland is 23%, Italy is 22%, Latvia is 21%, Lithuania is 21%, Luxembourg is 17%, Malta is 18%, Monaco is 20%, the Netherlands is 21%, Poland is 23%, Portugal is 23%, Romania is 19%, Slovakia is 20%, Slovenia is 22%, Spain is 21%, Sweden is 25% and the UK's standard VAT rate is 20%.

These figures are true as of August 2021 and can change at any time.

Please note, EU VAT law only requires a standard rate of 15% is applied by each country, so standard VAT rates will never drop below this amount.

Who is responsible for paying EU VAT under the IOSS scheme?

Under the Import One-Stop-Shop scheme, the customer will pay the VAT directly online (like you usually do for example in Amazon already). Then the business or marketplace who made the sale to the EU consumer will pay the VAT collected to the IOSS intermediary in Europe who will pay it on to the relevant tax authority on their behalf. All sales made EU-wide will be payable through this single IOSS intermediary and businesses will no longer need to register for and pay tax in each individual EU country in which they sell goods.

This system is designed to make not only the purchasing process more simple and transparent, but make the shipping and customs process faster. This is because rather than the buyer paying for the VAT separately (when the goods have been imported, as was previously the case), suppliers under IOSS will be responsible for collecting, declaring and prepaying EU VAT to the relevant authorities.

Which EU country is the best to register my IOSS with for VAT charges?

If you have a business established within the EU, then you can with apply for Import One-Stop-Shop registration within that country or with an intermediary based anywhere in the EU. If you have establishments across multiple European countries, then you may register in any country of the countries in which you have a fixed establishment or with an intermediary based in the EU.

If you have no fixed establishment within the EU, you must use an IOSS intermediary. Your IOSS intermediary can be registered in any European country. For instance, businesses based in the US and UK have been interested in registering with an IOSS intermediary based in Ireland, due to language similarities. However, many IOSS intermediarys based in Ireland don't have the shipping and/or VAT experience to rival Ship24. All of Ship24's onboarding, FAQ and team support is available in English and our prices remain very competative for the high-quality IOSS service we provide. If your interested in finding out why Ship24 is the choice for many big businesses when it comes to IOSS, click the button at the top of the page to find out more or chat to one of our team directly on the chat box on screen.

Businesses should note that IOSS intermediaries have a number of requirements placed upon them in order for them to operate, including monetary guarantees, which must be thoroughly considered by any business before entering into an agreement.

How frequently do I have to complete an IOSS tax return?

VAT payments and tax return submissions for the Import One-Stop-Shop must be done monthly. EU VAT charges can be paid to the IOSS intermediary who will check that the declaration is correct (with sales records from the relevant EU authorities), which will require an IOSS number in order to use. Final payment for non-EU businesses to the EU tax authorities must be handled by an IOSS intermediary registered in the EU, on behalf of the company.

Please note, the IOSS scheme only allows for output VAT payments and does not allow for any reclaim of input VAT. Separate refunds will be given if VAT is incurred in a country where a seller is without valid registration.

Will the new EU VAT affect my ability to track a parcel internationally?

All parcels can be tracked using the international shipment tracking website, Ship24. Regardless of whichever delivery agreement parcels are sent under, including IOSS, DDP or DDU, you can still track any registered parcel end-to-end with Ship24. All you need is your package tracking number, to begin tracking parcels with over 1,000 couriers, logistics companies and online marketplaces.

If you are a business who want to take your tracking capability to the next level, check our Tracking API and Webhook options today.

Does IOSS affect my VAT to sales outside of Europe?

IOSS is a new EU VAT ruling and only applies to sales to customers within the EU. IOSS is additional to your normal VAT accounting and administrative requirements. If you are based outside of the EU, you will still need to adhere to the VAT requirements of your own country in addition to the IOSS system. As your IOSS intermediary, Ship24 can help solve all of these issues easily and will guide you in order to make sure you meet IOSS obligations and benefit fully from the scheme. Find out more by chatting with our friendly team on the chat box on screen or send us an email to be put directly in contact with our expert, internaitonal staff.

Can I still send goods to the EU without registering for IOSS?

You can still continue to sell goods within the EU via the Delivery Duty Unpaid service, which puts the responsibility of all additional import taxes on the transporter (or customs declarant), or use a Delivery Duty Paid solution through a special arrangement. However, all goods delivered to the EU will be charged, including those with the value of 22 euros or less, which were tax-exempt prior to the new EU VAT rules which came into effect on July 1, 2021. So yes, VAT will be charged to non-EU countries.

However, this will likely prove counterproductive for businesses, given that the IOSS is designed to be faster, cheaper, and more efficient, especially for eCommerce businesses. For instance, DDU imports are often held at customs while outstanding payments are processed, causing delays for the buyer, worsening the post-purchase experience, and stretching the capacity of customs processing in general. With IOSS and prepaid VAT, goods can be fast-tracked through customs to every stakeholder's benefit. It is the best solution when importing into the EU for businesses, to ensure there is no outstanding vat on EU shipments.

Furthermore, the EU VAT prepay proposition offers better transparency and will help the EU reduce VAT fraud within its borders.

Can I still track parcels being shipped to the EU?

Whether your parcel is being shipped under the IOSS scheme, or via a DDU or DDP arrangement, you can still track any registered parcel with Ship24. Ship24 scans thousands of courier and logistics company sites to find the latest tracking information on your parcel in as close to real-time as possible.

Regardless of VAT laws in any region of the world, you will always be able to track your parcel with Ship24. In fact, for shipments due after July 1, 2021, it may be best to keep up to date with your business shipping with our professional tracking API and webhook functionality more than ever!

How does the IOSS system affect a marketplace seller's VAT?

The good news for e-tailers who sell to EU customers through an online marketplace (like eBay or Amazon) is that they may not be responsible for collecting and paying VAT, with the new IOSS scheme. If the marketplace has registered for IOSS, it will be the responsibility of the marketplace to collect and pay VAT at the point of sale, as it is facilitating the sale of goods. This means merchants can enjoy the benefits of IOSS without having to register individually. However, if you sell on multiple platforms or privately also, you should still look into IOSS registration for those sales.

If this is the case for your business, contact with the marketplace(s) you sell your goods to EU customers should be made.
Please note, sellers should work with marketplaces to both advertise this new system and inform customers as to the benefits. Also, this is not the case for all marketplaces, such as with smaller independent online platforms.

Essentially, if your business imports business to consumer products into the EU from outside the EU, which are valued at 150 euros or less, it will be beneficial for yourself and your customers to use IOSS.