IOSS and New EU Trade Rules – What to Know
By Alexander Maasik
New EU trade rules that have been in the works for years have now gone into effect. Sending goods into the EU is now much more complicated and businesses must either change the way they do business or lose their customers in the European Union.
Eurora is a rapidly growing global company that helps millions of people and companies active in the global e-commerce market. Eurora was the first company to start preparing for the new EU trade regulations. Working with universities, we built a scientifically backed AI that could fill electronic customs declarations automatically.
The only company to offer all the services.
Eurora is one of the only companies to offer all the critical services that help one handle the new regulations. Already trusted by hundreds of businesses across the globe, Eurora can make sure your goods keep moving smoothly across the EU border.
Over the last 3 years, Eurora Solutions has grown by bringing in leaders from the private sector, government agencies, and universities to build an international team of experts with a comprehensive understanding of global trade, regulatory compliance, and business.
In the field, Eurora has already proven itself, and already has the strongest presence in China and East Asia.
Our fully automated and science-backed AI-based solutions allow online marketplaces, carriers, and postal operators to save time and resources while handling large amounts of data near-instantly and precisely.
All orders are subject to VAT.
One of the biggest changes is that sellers must now collect VAT on all goods sold to the EU at the point of sale. What’s more, the VAT rate is dependent on the country of destination. Sellers must therefore be able to determine the VAT rates of specific goods for all of the EU countries they want to deliver to. These rates are different for each country in the EU.
Eurora has developed a Duty & Tax Calculation service. If added to an online store, it enables full visibility of the VAT and other taxes one needs to pay in the shopping cart of a marketplace. Eurora’s database covers VAT and duty rates, de minimis thresholds, and active free trade agreements for most countries in the world.
To declare VAT, the EU is using the new Import One Stop Shop (IOSS) scheme. The IOSS allows businesses to collect, declare, and pay VAT on low-valued consignments (up to 150 euros in value) in one EU member state.
What is the IOSS?
The Import One Stop Shop is a new system for handling VAT and other taxes when importing goods to the EU. To use the IOSS, the seller must be represented in the EU.
Companies can either open a business in any of the 27 EU member states or find a company like Eurora that acts as a Fiscal Representative. Eurora is one of the first companies in the world who is registered to offer this service. Eurora can represent your company in all the EU Member States.
Eurora is one of the first companies in the world who is registered to offer this service. Being an intermediary, Eurora registers non-EU sellers to obtain a mandatory IOSS VAT identification number. These numbers are unique for each seller.
To get an IOSS registration number for a client, Eurora collects minimum identification information from each customer. This is necessary to assess money laundering and terrorist financing risk according to the EU anti-money laundering rules. Starting from July 2021, Eurora will then act as an intermediary on behalf of the online marketplaces for VAT reporting purposes in all countries in the EU.
If the seller is not registered in the IOSS, the buyer must pay both VAT and any customs clearance fees themselves. In this case, the carrier company will charge these fees. This might come as a nasty shock for the person ordering goods.
All parcels entering the EU must be declared.
One of the biggest changes to EU trade regulations is that now all goods entering the EU must be declared in customs. Up until now, most of them fell under the Low-Value Item Exemption. Meaning, they cost less than €22 and therefore were exempt from being declared in customs. Now, no such exemption exists and every parcel needs to be declared.
Conservative estimates predict that the amount of declaration on the EU border will grow from 2 billion to 8 billion per year. For most sellers, this means, automatization is the only way to handle this sort of gigantic increase. As no one will be able to handle the workload of writing declarations manually.
Eurora can easily put together the necessary electronic declaration by combing our other services. Our HS Code Allocation service automatically identifies a product and assigns it the right HS code based on the product description. Then, based on the HS-code and country of delivery, Eurora™’s Duty & Tax calculation service calculates VAT and other duties that must be paid. And our AI, which is the most advanced in the world, determines if the goods fall under the IOSS scheme or if they need to be declared separately.
The electronic declaration is done through an intelligent transformation engine that consolidates the data sets sent by online sellers and then turns this data into electronic customs declarations. It then submits the electronic declarations via interfaces with customs authorities or ICS2.
If a company wants to continue doing business with the European Union, changes are needed. The old way of doing things will no longer work. While this might seem like a nuisance, it is actually an opportunity. Companies that are ready to adapt can gain a competitive advantage by working together with Eurora. So don’t hesitate to reach out to us.