IOSS is an online portal and requires only one monthly filing to report the VAT due on eligible sales. Businesses can use IOSS to pay and report the VAT due on distance sales of goods to EU based consumers when the goods are outside the EU at the point of sale.
Since the abolishment of the Low Value Consignment Relief (LVCR) in July, every seller making sales to EU customers will need to remit VAT. Goods which previously would have been VAT exempt as they were below the EUR 22 threshold will now need VAT to be applied, charged to the customer and remitted back to the tax authorities. IOSS is designed to alleviate some of the administrative burden that may be caused by the removal of LVCR, by simplifying the VAT reporting process.
What can be reported through IOSS?
For businesses who sell to EU based customers from outside of the EU, IOSS can be used to report the VAT due when the consignment being shipped is below EUR 150. Should the intrinsic value of goods ordered by an EU consumer go over EUR 150, this consignment will no longer be eligible for IOSS and instead, VAT will be due upon importation.
What is included in the intrinsic consignment value?
When shipping consignments into the EU, and calculating the VAT due, the value of the goods should be the price of the goods themselves when they are purchased by an EU customer. This value does not include transport and insurance costs unless these are included in the price of the goods, rather than being listed as separate costs. Any other charges and taxes are also excluded from the value calculation.
How does it benefit businesses?
As well as simplifying VAT reporting, the IOSS scheme can help to reduce times during customs clearance. As VAT is charged at checkout, businesses using IOSS will be able to ship the goods VAT-exempt into the EU. Your IOSS identification number will need to be securely communicated to the person in charge of declaring the goods at the EU border. As VAT has already been collected at the point of sale by the seller, the parcel will be customs-cleared without VAT being due upon importation.
This can mean that your consignments spend less time at customs and get to your customers quicker, creating a better buying experience.
Should you be appointing an IOSS intermediary?
Under the new rules, an IOSS intermediary is normally required for non-EU businesses. The intermediary is a new type of representative purely for IOSS. They will be responsible for registering your business for IOSS, submitting your IOSS returns on your behalf, and will be jointly liable for your IOSS VAT payments.
For EU-based businesses, appointing an IOSS intermediary is optional.
How can I get started?
For ecommerce businesses, IOSS can be exactly what’s needed to take the leap and excel in the EU market. Businesses of all sizes can benefit from the administrative simplification IOSS proposes and can make selling online just that much easier.
Our partners at SimplyVAT.com want every online seller to have the opportunity to grow, having just introduced an IOSS product that also caters to smaller businesses. Designed for ecommerce brands who are looking to start trading with the EU, their IOSS packages are flexible to reflect your business and your growth goals.
They also offer invaluable EU VAT advice with a team that handles queries in over 30+ languages – get in touch with a member of their team and have all your questions answered!
How can Plus Accounting help?
At Plus Accounting we have a wide range of clients across many sectors and can support you through the many changes that face you in the coming months. Such as UK VAT registrations, book-keeping and VAT support, even help with which financial reporting software and tools might suit you best.
If your accounting needs require a little more thought, or you have a burning question about anything you’ve read today why not book a call with our team.
Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.
Date Published: 20 December 2021