From 1 July 2021, there will be significant changes to the European Union’s Value Added Tax rules applying to the shipment of goods into the EU. While these reforms primarily target B2C e-commerce imports, impacting both businesses and online shoppers, they may also impact B2B imports.
If you ship goods into the EU, we recommend that you begin preparing your business now.
Please consider how the following changes may impact your business:
Removal of the €22 VAT exemption for imports
The VAT exemption currently in place for goods imported into the EU with a value up to €22 will be removed, meaning that these shipments will now be subject to VAT. These low value goods will therefore also require formal customs clearance, although most goods valued up to €150 remain exempt from customs duties.
Please ensure you provide a complete and accurate commercial invoice to reduce the risk of customs delays. You can submit your commercial invoice electronically so customs can start clearing your shipments before they reach the border
Launch of the Import One Stop Shop (IOSS) Platform for imports up to €150
The EU is launching an Import One Stop Shop (IOSS) platform to simplify the declaration and the payment of VAT for B2C imports up to a value of €150.
This optional platform only requires you to register with a single EU Member State to manage your sales VAT throughout the EU, removing the need to register for VAT in every country you are selling goods to.
If you are a non-EU based supplier or marketplace selling goods to consumers in the EU, registering with the IOSS means you can collect accurate VAT for the purchase from the consumer at the point of sale, which can then be declared and paid in a periodic VAT return.
Shipments containing a valid IOSS number will therefore not be subject to import VAT, which may help them move through customs quicker.
If your company does not have an EU-based establishment and you wish to register for the IOSS, you will need to appoint an intermediary to settle VAT through this platform.
Registering for the IOSS platform is not obligatory and you can continue to declare and pay VAT on EU imports as you do today.
Here is a useful checklist to prepare your business for these changes:
- Identify which areas of your business are impacted by the new EU VAT rules
- Assess your VAT accounting needs for the EU: Systems and master data updates are likely to be required to identify and apply the appropriate VAT rates in multiple jurisdictions
- You may consider registering for the IOSS platform if you want to use a single registration to pay VAT throughout the EU for B2C shipments up to € 150
- If you register for IOSS, appoint an intermediary to handle tax compliance on your behalf in the EU in case you don’t have an EU-based establishment
- Review and potentially cancel existing foreign EU VAT registrations if you wish to replace these with a single IOSS registration where applicable
- If you choose not to register for the IOSS platform, ensure you have a valid UPS account to charge import fees to
- If you are selling through an online marketplace, contact them to understand who will be responsible for VAT accounting for your B2C shipments up to €150
- If you choose to pass on import charges to your consignee, please inform them upfront that import fees will be due for their shipment.