Are you an eCommerce business selling to the EU? I bet 2021 was a tough year for you: new EU trade rules, new ways to handle VAT matters, and new schemes like the IOSS. Enough to give a headache even to the most seasoned cross-border sellers.
On July 1st,2021, the European Union enforced new EU trade regulations. They affected all businesses importing their goods into the EU as it is now required to collect VAT on all goods. To simplify those new VAT requirements, the EU created the IOSS (Import One Stop Shop). Yet, non-EU companies cannot register for the IOSS themselves. They need a VAT intermediary like Eurora.
One year after, even if many cross-border sellers heard of the IOSS scheme, the confusion remains. Let’s recap this tough regulatory year and shed some light on what puzzles sellers.
Are you searching for a reliable IOSS service to easily reach your EU customers? Eurora was the first VAT intermediary to give out an IOSS number for a client in the EU. We registered our first client months before the new rules went into effect, so we have unique expertise. Check out Eurora’s IOSS service and get your IOSS number in a few days!
What happened on July 1st,2021?
On July 1st,2021, the European Commission enforced new rules for the collection and return of the EU VAT. These new rules aim to prevent unfair competition between European and foreign eCommerce players. Before July 2021, goods imported to the EU benefited from a Low-Value Item Exemption. Goods under a total value of €22 were not subject to VAT. This rule has been abolished and all goods sold to the EU are now subject to VAT regardless of their value.
To make these new VAT requirements simpler, the European Commission created the IOSS (Import One Stop Shop). With the IOSS, you register in one EU member state only and submit one monthly IOSS VAT return. You also collect the EU VAT from your customers when they place an order with a value up to €150.
Even though the IOSS scheme facilitates VAT matters for non-EU sellers, registering can be confusing. When you are a non-EU business, you cannot get an IOSS number on your own. You need instead a VAT intermediary registered in the EU, like Eurora. There are currently around 15 VAT Intermediary service providers. Eurora was the first registered Fiscal Representative in the EU, and therefore the first to give out an IOSS number in the EU.
Eurora prepared for the implementation of the IOSS long before July 2021 and registered the first business for the IOSS on April 14th, 2021. Eilike Pruul, Fiscal Representation Manager at Eurora, recalls this first registration. “Before the registration, we had several meetings with the customer to explain all the changes and requirements. The registration itself went very smoothly, as we have created a very quick registration process with the Tax Administration.”
Why is the IOSS still needed a year after?
When the new rules went into effect, many cross-border actors struggled to understand the process. “The biggest challenge when the IOSS came out was confusion. Businesses didn’t know who these changes applied for, why it is beneficial, who should apply for an IOSS number, or who is responsible for what. There were logistical companies and postal offices that required their customers to use an IOSS number. Postal offices weren`t ready for the new regulations and buyers had to pay VAT twice,” said Eilike Pruul.
One year after, the confusion around the IOSS service remains, and many sellers are not aware of its benefits. Currently, there are approximately 8.800 valid IOSS numbers in the IOSS central register. However, the IOSS could help thousands more businesses selling to the EU. Many businesses that do not use the IOSS are at risk of losing their business in the EU. Jeff Seymour, managing director of 2 UK companies and using Eurora’s IOSS service said it himself: “I think that UK businesses will either stop selling to Europe or have to use a service like yours. There is no real option otherwise.”
If you are one of these baffled sellers, it is time to recap the benefits of the IOSS scheme. The registration is not mandatory; however, it is strongly recommended when you sell to the EU from a third country. All 27 EU members participate in the scheme and there are significant advantages for you and your clients:
- By using the IOSS, you offer a transparent transaction for your customer who pays a VAT-inclusive price at the time of the online purchase. By doing so, the customer has certainty about the total price of the transaction. He does is not confronted with unexpected costs to be paid when the goods are imported into the EU.
- Furthermore, the use of the IOSS aims for a quick release of the goods by the customs authorities. This means faster delivery of the goods to the customer, which is often crucial for the latter.
- The use of the IOSS also simplifies logistics. The goods can enter the EU and be released for free circulation in any Member State, regardless of which Member State they are ultimately destined for.
What is Eurora’s IOSS service?
On July 1st,2021, Eurora had prepared for a while and had already given IOSS numbers to clients. Thanks to this anticipation, we early had an expert IOSS team in place who helped many customers over the year. Furthermore, we have been able to improve our IOSS service based on our clients’ needs.
Ecommerce businesses from around the globe are using Eurora’s IOSS service. We have clients from the UK, Australia, Switzerland, USA, and China. They are selling various types of goods like clothes, shoes, books, games, beauty products, jewelry, CD-s, or chocolate. They mainly sell their goods to Germany, Netherlands, France, and Belgium.
Eurora’s IOSS service differentiates itself by combining automation and a personal approach. Our clients can get a personal tax consultant who accompanies them and answers their questions. Our service is very flexible and adapted to new customers’ needs throughout the year. Eilike Pruul explained: “We are communicating with our customers daily and collect feedback on what kind of support and solutions they are expecting from us. Based on this feedback we changed the way we register our customers, how we give consultations, and what is the most suitable way for the customer to send us sales data or other information. We are operating by the rule that our service must be smooth and simple for customers.”
This approach satisfies eCommerce businesses using our service and the IOSS team receives a lot of positive feedback. “Thank you for your detailed explanation regarding our questions as well as additional information about when to use the IOSS number, and when to collect VAT. Very nicely explained.”
In the future, Eurora will keep adapting its service to clients’ needs: “If something doesn`t work, we fix it. The IOSS regulation has been in place for a very short time, and we learn every day from our customers.” Eilike Pruul, Fiscal Representation Manager at Eurora.
Whether you want to expand to the EU or try to sort out the regulatory puzzle with your existing EU clients, the IOSS registration is not to be overlooked. To benefit from the IOSS, you will just need to make sure that:
- You are a B2C seller
- Your goods are located outside the EU when they are sold
- The goods you are dispatching have a value inferior to €150
- The goods are not subject to excise duties (indirect taxes on specific products like alcohol or tobacco)
If you use Eurora’s IOSS service, you will get your IOSS number in a few working days. You will just have to submit a registration form and receive an invoice from us. Once you pay the invoice, you will receive your IOSS VAT number within one working day. We will then contact you and answer all your questions. Once you receive your IOSS number, you can start using Eurora services right away.