IOSS- EU's Import One-Stop-Shop simplified for the Indian Seller
- IOSS came into effect on 1st July 21, making all the low-value shipments to the EU, those below €150 eligible for reporting and payment for tax.
- For this, the EU introduced the IOSS- Import One-Stop-Shop that allows merchants to sell low-value goods to any of the 27 EU member states on a single registration.
- This post is for Indian sellers selling across the border to an EU member state explaining what IOSS is, how it works and who needs to get registered.
If you are an Indian Seller who does B2C transactions with any of the 27 states of the EU (European Union), the term IOSS might not be new to you. And even if it is, knowing about it will help you enhance your operations in one of the biggest markets in the world. IOSS is the recent VAT (Value Added Tax) reform that became effective this month, on 1st July 2021. What this VAT reform did was require reporting VAT on smaller shipments, that is the ones below €150. It made many things easy for e-commerce by providing one key to open doors of all the 27 states for non- EU companies that sell across the border. This blog will help you understand what IOSS is and how it works.
What is IOSS and how does it work?
IOSS or the Import One-Stop-Shop is a new simplified reporting model or an electronic portal designed to make VAT compliance easy for non-EU merchants. Under this model, a merchant needs to get registered under the IOSS scheme through an intermediary from any of the member states. From 1st July 2021, VAT was to be charged on low-value imports. The IOSS model allows easy collection, declaration, and payment of VAT creates a ‘green channel’ allowing fast and easy passage of goods through customs. This allows the goods to be passed easily and avoids the problems of goods being stuck in customs. And the best part is, that you need one registration for shipping to any of the 27 EU member states. IOSS, however, is not applicable for shipments of value greater than 150. Another compromise that the users of IOSS must make is that sellers must collect VAT at the point of sale and not at the time of import. Using IOSS is not mandatory. One can opt to continue selling like before. But IOSS is more convenient for B2C sellers and retailers and therefore they are more likely to opt for it.
Who requires to get registered for IOSS?
- Any non-EU person, company, or business selling low-value goods B2C (Business to Consumer) or otherwise to any of the EU member states, or someone who wants to use IOSS needs to get registered under the scheme. If you are an independent seller of small low-value products and have customers in any of the member states, you would have to pay and report VAT and for that, you would require to get yourself registered under it. You should find an EU resident registered intermediary, like Avalara to represent you for VAT purposes. This intermediary shares the responsibility of reporting that is return submission and payment of VAT. In simple words, payment of VAT and submission of returns becomes the joint responsibility of the intermediary and the person who appointed them. Member states can try to acquire VAT from the intermediary as well as the supplier.
- A marketplace that allows multiple sellers to sell goods to any of the EU member states will require to get itself registered, too. If you host a marketplace, you enable independent sellers to sell across the globe, taking up the responsibility of VAT reporting and payment. If you are an independent seller selling B2C via a marketplace, you don't need to worry about getting a separate registration since your marketplace is taking care of it.
Avalara operates as an intermediary for independent sellers and marketplaces. Benefit from IOSS and grow your business now. To read more about the role of an IOSS intermediary, visit here.
Tax regulations change continuously and keeping up with them can become a real hassle. Experience seamless commerce by choosing automation, a cost friendlier and smart option. Avalara helps businesses comply with the new EU VAT regulations. Visit this page to know how.
Prepare your business for e-invoicing under GST
Discover how to meet all compliance requirements while integrating e-invoicing into your tax function.
Stay up to date
Sign up for our free newsletter and stay up to date with the latest tax news.