VAT Director Rayner Essex
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VAT: IOSS isn’t that simple for small parcels

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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.

9th Jun 2021
VAT Director Rayner Essex
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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.

Registration

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.

IOSS guidance

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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Replies (13)

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Caroline
By accountantccole
09th Jun 2021 13:18

Thank you. It is great that even at national level no-one seems to know what the rules are!!

Do we know if the distance selling thresholds for UK suppliers is 10k €, same as intra-community sales or is it nil as no PE?

Thanks (0)
Replying to accountantccole:
Jason Croke
By Jason Croke
10th Jun 2021 17:13

Import One Stop Shop (IOSS) has no threshold, IOSS is designed for non-EU traders who are selling goods located outside the EU, to EU consumers. It is optional remember.

One Stop Shop (OSS) has a €10.000 threshold and replaces what was the distance selling rules, OSS is focused on goods that are in the EU at time of sale. So a UK entity which has stock in a French warehouse would register for VAT in France because until they hit the €10.000 threshold they are still making sales of goods from France warehouse and then when they go over the €10.000 threshold they continue to charge French VAT on sales to French people on their French VAT return and then they declare other EU sales on their OSS return.

Distance selling wasn't very successful as the cost of multiple registrations in each member state where they sold more than €35.000 of goods put traders off, whereas OSS makes it less difficult by having one return covering all EU sales.

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Ivor Windybottom
By Ivor Windybottom
09th Jun 2021 18:24

It seems the million Euro question is therefore whether the EU-UK Trade and Cooperation Agreement counts as a VAT mutual assistance agreement.

A quick Google suggests not and that it is only the previously made agreements listed here:
https://ec.europa.eu/taxation_customs/business/international-affairs/int...

Hope I'm wrong!

Thanks (1)
Replying to Ivor Windybottom:
Jason Croke
By Jason Croke
10th Jun 2021 16:40

Articles 101 and 120 (link is in my article above) of the EU/UK Trade Agreement makes reference to trade and cooperation agreement and so it suggests there is an agreement in place, but clearly one of interpretation seeing as some member states are okay (France) and other are not (Ireland).

But agree, it is all very confusing for businesses who may read conflicting articles from the internet, HMRC and the EU itself.

Thanks (0)
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By Paul Crowley
10th Jun 2021 12:15

EU countries can not agree what EU rules are.
No change there then.

Ireland looking to take the least helpful interpretation.
No change there then.

Thanks (4)
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By moneymanager
10th Jun 2021 15:27

Is the atomisation of the EU already on progress?

"EU takes legal action against Germany after tussle between courts

Brussels says German court ruling contradicting ECJ sets ‘dangerous precedent’ for integrity of EU law"
Brussels has launched a legal case against Germany over an alleged breach of “the principle of the primacy of EU law” by the country’s constitutional court.

The “infringement proceeding” is the result of a ruling last year by the German federal constitutional court in Karlsruhe which it is claimed undermined the pre-eminence of the European court of justice (ECJ).

The German court had contradicted the ECJ by instructing Berlin to delay approval of a European Central Bank multi-trillion-euro bond-buying programme due to concerns that it was straying into financing member states, something it claimed was not permitted under EU founding treaties.
“This could threaten the integrity of [EU] law and could open the way to a ‘Europe à la carte’,” a commission spokesperson said. “The last word on EU law is always spoken in Luxembourg.”

https://www.theguardian.com/world/2021/jun/09/eu-launches-legal-case-aga...

the fat lady is still singing.

Thanks (3)
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By billmurdo
10th Jun 2021 15:51

Thanks but your article is not fully researched. IOSS preparation is a shambles so far but it is likely that the penny will drop and reality set in soonish. There are a couple of schemes already in place to handle such things as the EU VAT, customs declaration, import duties etc. For £2000 per year PWC (for any number of small parcels sent with a maximum value of €150) offers a scheme to deal with this matter on behalf of the seller plus there are a number of API's who will remove all the hassle for £2 per transaction (plus the costs mentioned above).

Thanks (1)
Replying to billmurdo:
Jason Croke
By Jason Croke
10th Jun 2021 17:03

Amazon do a flat fee of about £300 for a years worth of VAT returns and Royal Mail have a new product but my article was about getting businesses to deal with IOSS rather than the fine detail of which supplier to use.

Whether businesses want to do this themselves/rely upon advisors, the takeaway is to get this sorted now, don't wait until July. I've seen first hand how businesses procrastinate, despite all the Brace for Brexit articles on Accounting Web last year, we're still getting basic Brexit questions being asked in Any Answers today.

My articles are limited to around 600 words so its a question of keeping a focus on what I am trying to convey, so I'm not sure its a case of not being fully researched, more a case of my message here was to get moving on this now.

If you've got links to the PWC offering or the API's then do please share, that is the essence of AccountingWeb, to share knowledge amongst Accountants and readers I am sure would appreciate it.
Link here to the Royal mail offering https://www.royalmail.com/business/international/guide/delivered-duties-...

Thanks (6)
Jason Croke
By Jason Croke
24th Jun 2021 10:11

HMRC are offering IOSS registration for businesses that come under the Northern Ireland Protocol (ie, NI based traders), it is not there for GB traders, as I understand it.

With regard Republic of Ireland, the article above stated that Ireland required a tax agent and my article on this suggested this was wrong as the EU law clearly identified GB as having a co-operation on tax agreement with the EU.

I was looking at Irish website last night and I noticed they've updated the guidance since my article.

If you visit here
https://www.revenue.ie/en/vat/vat-moss/ecommerce-rules-010721/oss-and-io...

on right hand side is a box "Further guidance", there are two links in that, the top link is the newest version, but comparing both, the old guidance states you need a tax agent, but the new guidance doesn't mention anything at all about agents and so perhaps Ireland has since recognised that EU law applies to them after all.

Thanks (1)
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By Liz Pile 2
25th Jun 2021 20:11

I have been speaking to Revenue Ireland about exactly this today, and they confirmed that they do not permit GB businesses to register directly with them for IOSS - it can only be done via an intermediary. The intermediary would then file the returns too. The only exception is that if the GB business has a taxable entity resident in Ireland (for example an Irish company in the same group), that entity can register with Revenue Ireland as an intermediary and then act as the intermediary for the business that needs to file the IOSS returns.
There is considerable variation in how long intermediaries say it takes them to set up an IOSS registration. Some say just a few days, others several weeks. I believe most well-established firms which specialise in EU VAT compliance services would be able to act as an IOSS intermediary and set up a registration fairly quickly. As mentioned in other posts, larger firms such as Deloitte, KPMG etc are also offering IOSS solutions, as are Royal Mail and other providers. A few of these can use their own IOSS registration for the customs declaration and returns (for low-volume sellers), but most require the business itself to register.
If you search for 'IOSS registration solution' you can find some of these providers.
Hope this helps.

Thanks (1)
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By IreneA
28th Jun 2021 10:37

If you only sell to the EU via Amazon or Shopify is it correct to say that they will handle IOSS registration and reporting for you (or rather that you don't have to register because you are using their registration)?

Thanks (0)
Replying to IreneA:
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By elgrecominis
03rd Jul 2021 10:47

Shopify is not the same as Amazon or Ebay so, it will not handle IOSS registration or reporting. It is working on implementation of the £135 threshold for VAT inclusion/exclusion but for IOSS you need to find an alternative system.

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By IreneA
28th Jun 2021 10:37

deleted double post

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