IMPORTANT Notes for EU Sellers! Read This to Find Out How It Might Affect Your Business
Updated: Jul 6
The European Commission has recently passed new regulations regarding taxation for imported goods called Import One-Stop Shop (IOSS). Let us take you through the most common questions and concerns regarding this new law.
1. What is the biggest change?
Previously, commercial goods valued at or under EUR22 were exempted from VAT in the EU region. However, effective from 1 July 2021, all imported commercial goods into the EU will be taxed regardless of how much they are worth. However, this rule only applies if the buyers reside within the EU and the total worth of goods amounts to less than EUR150.
Note to Xianchao Logistics’ clients:
All packages shipped out from our warehouse will incur VAT starting from 23 June 2021. If you have not registered for IOSS, we will pass on the cost of VAT to you.
2. What is IOSS? How does it help sellers?
Previously, EU suppliers have been required to pay tax at the time of importation, if applicable. IOSS is a digital portal enabling sellers of imported goods to declare and pay VAT to tax authorities according to the new legislation. However, if the suppliers do not have registered accounts on IOSS, the customers would then have to pay VAT and other custom clearance fees to the carrier services upon receiving their parcels.
Note to Xianchao Logistics’ clients:
You are encouraged to register for IOSS if you are selling to the EU. After registering for IOSS, send us your IOSS information.
Without IOSS, our logistics partner will bill us 31.5% of the value of the goods for handling and VAT. We will pass the cost on to you accordingly.
3. What are the benefits that I would enjoy when registering with IOSS?
Firstly, it makes the process of complying with the new VAT regulations more seamless for business owners. If you are selling across several EU countries, this is even more convenient since you will only need to file one IOSS VAT return. This means less paperwork and overheads.
Secondly, items imported into the EU region by registered businesses would be quickly cleared through custom and immigration once their IOSS numbers are identified and validated. In contrast, goods belonging to unregistered entities are to be held at checkpoints until VAT is paid. This would speed up the delivery time for your orders, thus giving you an edge over the IOSS-unregistered competitors.
Thirdly, it makes dropshipping more transparent, hence leaving the end consumers a better impression on the industry in general and on your store in particular. More specifically, because IOSS requires VAT to be included when goods are sold, your customers do not need to pay additional fees such as custom clearance upon the packages’ arrival at the doorsteps. With no hidden fees, customers are more likely to be satisfied with their purchases and visit your store again in the future.
4. How can you as a seller register for the IOSS?
If your company is located in any of the EU member states or you have a European partner, you may apply directly for an IOSS number. In principle, you should register in the country where the transport starts. Please find more information on each country here:
This article does not constitute legal or tax advice. This merely represents our interpretation of the changes from IOSS. When in doubt, you should consult your legal or tax advisor.
You may read more in the official announcement made by the EU Commission here: https://ec.europa.eu/taxation_customs/business/vat/ioss_en
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