IOSS and your small business

Once upon a time, selling internationally was a pursuit reserved for the big guys; large, major merchants who employed the resources and revenue to advertise, sell, and ship outside of their home-base borders. Then came the internet. Steadily, a veritable garden of worldwide selling opportunities blossomed for small retailers.

Not only are there now tools and platforms that support international selling, consumers are more willing and able to shop across borders. In fact, limiting sales to in-country markets can be a distinct disadvantage, even for small sellers.

But while international selling can be lucrative, it also creates new tax liabilities. Fortunately, the European Union (EU) has made compliance simpler with new value-added tax (VAT) regulations. Chief among them: Import One-Stop Shop (IOSS).

IOSS is a voluntary program that can be used instead of traditional Delivered Duty Paid (DDP) or Delivered At Place (DAP) tax payment options for shipments with a total value under €150. But which is right for small retailers? Like with most things tax-related, it depends.

Similar to DDP, IOSS requires that VAT be collected at the point of purchase. It’s paid by the customer and remitted by the seller. An IOSS shipment can be imported via any EU country and goes through an expedited customs process before being delivered to the customer.

Unlike DDP or DAP, the IOSS program allows businesses to register with a single EU member state, then use that registration number across all 27 members of the bloc.

One potential challenge is companies must be established in an EU country in order to register for an IOSS number. Luckily, non-EU businesses can appoint a qualified intermediary who registers for the number on their behalf.

Learn more about what U.S. sellers need to know about IOSS, as well as the potential pitfalls of trade restrictions and prohibitions. And if you’re ready to take your small business to international markets, Avalara can help with our cross-border solution.

Recent posts
Finance leaders share insights in Fast Talk Finance webinars
Multichannel commerce benefits and best practices
Digital goods marketplaces have real compliance challenges
2023 Tax Changes blue report with orange background

It’s here — Read Avalara Tax Changes 2023

Review tax updates and trends, plus get a forecast of what’s to come

Go to the report 

Stay up to date

Sign up for our free newsletter and stay up to date with the latest tax news.