IOSS scheme, implemented in the EU in 2021, simplify imports and makes shipping faster for companies selling in the continent. The full name of the scheme is Import One Stop Shop, and in addition to its other benefits, it helps online sellers in the EU with their VAT compliance. Its counterpart OSS is responsible for similar VAT simplification for Intra-Community sales in the EU.
The IOSS scheme replaced a previous VAT exemption of low-value goods and has already helped European governments to collect millions in VAT, increasing the transparency of international sales.
In contrast to a typical procedure when VAT is added when a shipment enters a country, IOSS allows accounting for VAT at the moment of purchase. This helps customers to judge the final price of a product better.
A company can enroll in the IOSS scheme if it fits several criteria. First of all, it has to sell goods originating from outside of the EU to European customers. The shipments eligible for the IOSS scheme must cost less than EUR 150 and be excise duties-exempt.
IOSS number is obtained when registering at the IOSS portal in one of the EU states, which will serve as a gate to the scheme. If your business is from the EU, you will register in your origin country. At the same time, a third-country company will be required to hire an intermediary – a representative from the EU.
Once the IOSS registration is completed, the IOSS number will be used in the documentation provided to customs authorities and to display and collect VAT. An IOSS-registered company is responsible for submitting regular IOSS VAT invoices and making VAT payments within deadlines. Records of the IOSS transactions must be archived for ten years.
If a company chooses not to register for IOSS, it must register for VAT in each country where it sells the goods. The business will have to provide separate VAT reports in such a case.
If you have questions about IOSS registration or administration, contact Vatabout staff!