VAT: IOSS isn’t that simple for small parcelsby
The Import One Stop Shop (IOSS) aims to simplify cross-border VAT for consumers. The scheme goes live on 1 July 2021, but already some GB based taxpayers are finding some unexpected complications.
The import one stop shop is an EU wide scheme; the aim is to simplify the movement of goods not exceeding €150 (£135) to consumers (B2C). Without IOSS, non-EU sellers who ship goods into the EU will see the consumer incur import VAT which the consumer must pay to receive their goods.
To improve the customer’s experience, the seller can register for IOSS, then the seller charges VAT to the EU consumer, using the EU consumers local VAT rate. The goods are then shipped clearly showing that VAT has been charged and are delivered with nothing else for the consumer to pay. The seller submits an IOSS return and pays over the various VAT amounts they have collected from their EU customers at point of sale.
An EU based business can register for IOSS with their local tax authority. For businesses based outside of the EU, such as in Great Britain (GB), the received wisdom has been to register for IOSS in Republic of Ireland, mainly because of the use of the English language.
The Republic of Ireland recently published its IOSS guidance and the surprise is that a non-EU business cannot directly register for IOSS, registration can only take place via an intermediary.
An intermediary is an agent, usually an accountant appointed to register and file your VAT/IOSS returns. A trader based in GB may have thought they could register for IOSS themselves but seemingly that is not the case, and the trader will need to engage with a local (Irish) accountant to register and submit the IOSS returns.
If a non-EU established supplier wishes to register for the IOSS, they can only do so directly if they are established in a country that the EU has a VAT mutual assistance agreement in place with and the goods are supplied from that country to the EU. In those cases, the supplier can register directly in the Member State of their choosing.
In all other cases, a non-EU established supplier must register for the IOSS indirectly through the appointment of an intermediary. The registration of the supplier will be done through the intermediary they have appointed to represent them, and the Member State of registration will be the Member State where the intermediary has established their business.
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Jason has over 20 years’ experience working exclusively in indirect taxes (VAT, import duty, SDLT) with owner-managed businesses, corporates and not for profit sectors. He particularly enjoys challenging HMRC decisions, representing clients in tribunals or during inspections.
Experience includes land and property, partial exemption and...