What is the Import One-Stop Shop (IOSS)?

The Import One-Stop Shop (IOSS) is the electronic portal businesses can use since 1st July 2021 to comply with their VAT e-commerce obligations on distance sales of imported goods.

When this scheme is used, the seller will charge and collect the VAT at the point of sale to EU customers and declare and pay that VAT globally to the Member State of identification in the Importers One-Stop Shop (IOSS).

It facilitates collection, declaration, and payment of VAT for sellers that are making distance sales of imported goods to the buyers in the EU.

Therefore, in this case the Seller will be treated as Importer of Record.

IOSS covers the following types of transactions for sale of goods from distance:

1) Goods dispatched or transported from outside of the EU at the time they are sold.
2) Consignment’s value is not exceeding 150 Euros even if Item contains more than 1 Item.

How does IOSS Work?

1) Sellers registered in the IOSS need to apply VAT when selling goods destined for a buyer in an EU Member State.

2) The VAT rate is the one applicable in the EU Member State where the goods are to be delivered.

3) Under this scheme, consignment value of goods not exceeding 150 Euros will no longer incur Import VAT or Import Duty at the time of goods entering EU Member State from Non-EU Member State (E.g., GB).

Instead of this, Non-EU Member State’s seller will be treated as Importer of record and must charge Sales VAT at point of sale at appropriate local VAT rate applicable to the EU customer’s country.

Please get in touch if you want to keep your ERP up to date on VAT requirements.

Office: +44 1908 508080 | [email protected]

If you would like to know more about modernising VAT for cross-border e-commerce, click here!

For more information on IOSS, click here.

What does this mean for Business Central/Navision configurations?
In Business Central/Navision, VAT Posting setups need to be setup and VAT rates need to be defined for every separate combination of VAT Business Posting Group of respective member country (depending on country customer is from) and VAT product posting group applicable for particular commodity code. These rates need to be applied for all the Sales Orders on which total value of goods sold is up to 150 Euros.
The Seller does not need to charge VAT on sales of goods in the following circumstances:
  • Seller sells several goods to the same buyer, and these goods are shipped in a package amounting to more than 150 Euros. These goods will be taxed at importation in the EU Member State.
– Therefore, here EU Member State Customer will be treated as Importer of record and Customer must not charge VAT on the Sales invoice. – Goods will be dispatched under Delivered Duty Paid (DDP) Scheme. – Under this arrangement, Non-EU Member State Seller (GB Seller) must pay for delivery cost to the destination country while EU Member State Customer will pay for Import Duties, Taxes, Custom formalities in their country, Unloading Cost etc.
What else needs configured within Business Central/Navision?

1) In Business Central, orders which are shipped with ‘Goods Value’ of more than 150 Euros should not charge VAT for sales made to B2C Customer present in EU Member State.

2) In Shipping Method Code, new shipping method DDP should be added and should be selected on Sales Orders.

3) Seller’s distance sales of goods are facilitated by an electronic interface such as a marketplace or platforms (For e.g., Amazon). In this situation, the electronic interface (For e.g., Amazon) is responsible for the VAT due.
– I.e. In above scenario Businesses operating electronic interfaces such as marketplaces or platforms will, in certain situations, be deemed for VAT purposes to be the supplier of goods sold to customers in the EU by companies using the marketplace or platform. Consequently, Marketplaces will have to collect and pay the VAT on these sales.
– Therefore, the Seller who is selling the goods will in turn only receive net amount (selling price less VAT).

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