From the 1st July 2021, the way in which VAT is paid on goods imported into the EU is changing. This is called the Import One-Stop-Shop (IOSS).
As a seller who ships their products from the UK into the EU, you need to be aware of these changes to avoid any potential pitfalls in July and beyond.
Last month, we published our “Ultimate Guide to the EU VAT Changes”, which you can download by navigating here.
With the deadline looming, we have collated all the frequently asked questions we have received from clients and prospects alike and provided answers for them.
Frequently Asked Questions
How do I know when to use my own IOSS number or the marketplace IOSS number?
This depends on who is collecting the VAT. If you are selling on your own website, and collecting the VAT yourself, then you will use your own IOSS number. If you are selling on a marketplace, such as eBay or Amazon, and they are collecting the VAT, then you will use the marketplace IOSS number. However, if you are selling on a marketplace and they are not IOSS-registered, then you cannot use the IOSS service.
In terms of specifying the marketplace, are general terms like “Amazon”, “eBay” enough? When it is comes to our own website, do we need to provide the full domain?
Please stipulate the online platform as “Amazon DE”, “Amazon FR” etc, rather than just “Amazon”. For your own website, you should provide the website name, e.g., “Asos.com”.
How will VAT be collected from us where no IOSS registration is evident?
The “Destination Custom Clearing” model is used when IOSS is not available. We cannot speak on behalf of other carriers, but for parcels with delivery addresses in the Netherlands, Belgium, and Ireland, MHI will continue to pay the import VAT to the customs authority on the client’s behalf and invoice the client.
The client will follow the existing VAT returns process that is recommended by their VAT specialist for those specific countries.
For the rest of the EU member states, we cannot confirm yet how the financial arrangements will work but we will try our best to offer a similar service as the import VAT will need to be paid at point of clearance in the destination country.
When a parcel value is over EUR 150 and IOSS isn’t an option, how will correct VAT be charged?
“Destination Custom Clearance” is applicable. In this scenario, when the parcels are custom cleared in destination country and the import VAT paid at point of clearance, the relevant customs authority will charge the country’s applicable VAT rate (e.g., French customs will charge the French VAT rate) when calculating the Import VAT.
Do you have a Postal DDP option using the IOSS service?
Yes. Pricing will be available for both Postal DDP and Tracked DDP. Our IOSS rate offering will most likely be an optimised blend of DDU and DDP rates.
Shipping Cost Scenario:
Other carriers have advised us to declare zero shipping cost when the shipping cost is included in the intrinsic value (free delivery). This contrasts with legal advice, where we have been advised to declare the real transportation costs in all cases, including “free delivery”. Is there a difference between regulation and practice? And, if so, what is accepted by customs authorities?
Are your brokers comfortable with reporting zero shipping costs in the manifest?
No. We have been advised by our custom broker and auditors to declare the shipping cost. It needs to be the cost of shipping from the UK to the point of customs clearance.
Do you have experience with sellers reporting zero shipping costs when they include shipping in the price?
All our clients provide the shipping costs separate to the product value on the manifest data feed. They split it out before sending us their data file.
What happens if I do report zero shipping costs?
In these cases, the customs authorities may estimate a cost on your behalf.
Can you advise a customs auditor?
Yes. They provide an excellent service. Should you wish to be connected, simply get in touch with us and we shall make the necessary introductions.