‘Is my business benefitting from the IOSS’ is a question that many businesses have been asking themselves recently.
On July 1, 2021, all countries in the EU will begin using the new standard for value-added tax (VAT) reporting, known as IOSS. This is important because businesses selling to EU consumers from outside of the EU block can collect VAT from final consumers based on delivery country, file VAT returns and pay VAT.
Businesses that have already started using IOSS can see a significant difference in their tax reporting process: EU based company they can upload their VAT returns directly to their country's tax authority instead of waiting for a third-party vendor or external auditor. As for the non-EU based businesses, it allows them to send the goods directly to the final consumer into European Union, charge and collect the VAT based on the consumer location and with single registration handle EU wide VAT compliance. It has some limitations. This scheme works for low value goods – consignment value should be not more than 150 Eur and non EU businesses have to appoint and intermediary for handling IOSS.
Despite a fall in global commerce, the report showed that UK firms had enjoyed a 94% increase in favorable customer feedback and more accessible exporting when selling to EU. Customers are more inclined to stick with a brand if they feel they have a role in how their money is used. As a consequence of the adjustments made in July 2021 in comparison to the revenue produced in the first two quarters of 2021, revenues grew by 4.2% from July 1 onward.
The net revenue gained by e-commerce VAT reform could be as much as 10.8% higher if implemented in 2021 than it would have been otherwise. If the reform had been implemented half a year earlier, exporters might have recovered as much as £5.2 billion from goods they couldn't export because of complex regulations.
Looking to register?
Make sure you’re taking full advantage of this new scheme. If you’re still confused or need more help, don’t hesitate to contact us at Vatabout. Our team of specialists will help ask your questions and address your inquiries.