Case Study: Using the IOSS to solve EU rules puzzle
By Camille Felappi
“Eurora has made the initially very complex and overwhelming new rules of IOSS a breeze.”
We spoke with Charlie McEvoy, founder of Plant Faced Clothing. They shared with us how confusing the new IOSS rules appeared for online sellers. And why an IOSS solution like Eurora was the only way out.
Have you ever had your back against the wall because of overwhelming regulations? This is exactly how it feels to be a global seller like Plant Faced Clothing since July 2021. Last year, the European Union issued new trade rules that disrupted business with the EU. The idea behind those changes was to ensure fairer taxation and avoid VAT fraud. But for global sellers, it resulted in a regulatory upheaval to which they had to adapt very quickly. Otherwise, they would lose their EU customers.
Plant Faced Clothing is a UK-based company that makes vegan streetwear clothing. They focus on conscious materials and ethical production.
Coping with new EU trade rules
When the new EU trade rules came out, it has been particularly baffling for UK businesses like Plant Faced Clothing – and for a good reason. Schemes in place are different for EU-based and non-EU-based companies. And the UK was in the middle of its post-Brexit transition. Therefore, no one knew if UK businesses would need a Fiscal Representative like non-EU businesses. Or if they would benefit from a special agreement.
Plant Faced Clothing experienced that confusion. “We were struggling to navigate the new IOSS rules when the system got rolled out.”
And they were not the only ones. Other businesses like Print My PDF shared with us the challenges they faced when those rules came out.
For small structures like Plant Faced Clothing, dealing with VAT for each parcel sent in the EU is an unprecedented challenge. Before July 2021, most small and medium businesses shipping goods to the EU didn’t even have to think about VAT. There was a Low-Value Item Exemption in place for many years. In other words, goods could be imported into the EU free of VAT if their total value was less than €22. With that rule, around 90% of packages could enter the EU tax and duty-free. Because most goods traded in the EU cost less than €22.
This exemption rule now belongs to the past. Sellers must collect VAT on all goods they sell to EU customers. They must also declare in customs all goods entering the EU regardless of their value. And to make matters worse, each Member State applies its own VAT rate. Did you know that there are about 100 different VAT rates inside the EU?
As a result, the EU created the Import One-Stop-Shop (IOSS) platform. Its purpose is to help businesses like Plant Faced Clothing cope with new requirements. However, non-EU businesses must hire a Fiscal Representative like Eurora to use the IOSS. And so must UK businesses.
Choosing Eurora’s IOSS solution
Charlie started to search for an IOSS service when they realized how complicated trading with the EU would be without IOSS number.
They were searching for an IOSS solution that wouldn’t be too expensive. And that would make the new IOSS process clear enough to relieve them from the stress they went through. For them, Eurora’s IOSS service met all the criteria.
Eurora was the easiest and friendliest to communicate with and also the most cost-effective!
Charlie also highlighted the easy onboarding they experienced to get their IOSS number. “We were up and running straight away without issues, and our account manager was very helpful in answering any questions we had along the way.”
At Eurora, we value a personal approach. We believe that you should focus on your core activity instead of struggling with regulatory compliance. Therefore, we make sure you can benefit from our experts’ knowledge and experience.
Our clients have a personal tax consultant who helps with any tax matter. Charlie particularly insisted on that asset of our solution. They told us that their tax consultant not only helped “ease the stress of this new system” but also went further. “They even go out of their way to help when we make errors and go the extra mile in helping with queries and catching things we might not have noticed.”
A full solution for eCommerce
You are an online seller, and you want to ship your goods into the EU without obstacles? Then you should turn to an IOSS service like Charlie. With our IOSS service, you will receive your IOSS number in no time and get full support as Charlie pointed out.
With the IOSS, you register in one of the 27 Member States only and submit one monthly IOSS VAT return. Without the IOSS, you need to register in each state you trade with separately.
The IOSS solution also helps you move your goods faster to customs. VAT is collected when the client makes a purchase, so there is no risk to see the package held in customs. It also ensures more transparency for the clients: they see the VAT due in their shopping cart. So, they do not risk any unexpected fees when the package goes to customs.
Are you willing to expand your business globally? We can offer you a full solution including not only the IOSS service but also other critical global compliance services. We cover UK VAT agent services, automated Custom Clearance, Duty&Tax Calculation, HS code Allocation, and even Restriction Screening.
Having us taking care of all the cross-border compliance issues, you will have more time to focus on your goods and clients.