The IOSS (Import One-Stop Shop) is an online platform that helps companies that sell products to people in the EU to collect, declare, and pay VAT at a single location. You, as the seller, charge VAT at the point of sale, so customers are not surprised by ‘’X’’ tax on their deliveries. IOSS simplifies cross-border e-commerce for foreign companies, but you have to know how it works.
Work with an EU intermediary
Since you are a non-EU business, you cannot register for IOSS directly. First, you will require appointing an EU-based intermediary. They could be a tax agent, law firm, or provider specializing in global trade consulting. This intermediary will:
- Register you with IOSS and give you a unique IOSS number
- File your monthly VAT returns
- Manage communication with EU tax authorities.
Consider the intermediary your compliance partner. You cannot legally use IOSS as a foreign company without them.
Add VAT to your checkout form
After you have your IOSS number, the next thing to do is to set your online store or marketplace to use the appropriate VAT rate in every EU member state.
- Ensure that the e-commerce site is capable of identifying the country of the customer
- Charge the product price with the VAT of that country when checking out
- Show the final price including VAT to minimize confusion.
This process should be seamless. As a result, your customer will be satisfied and less likely they encounter surprise charges on delivery.
Declare customs using the IOSS number
When transporting parcels to the EU, you will need to add your IOSS number to your electronic customs declaration. This informs the customs that VAT has already been levied.
- Provide your logistics partner/courier with your IOSS number
- Make sure to properly affix it to the data of the shipment
Without the IOSS number, your customer will still be subject to paying VAT at the border, and this is pointless.
File monthly VAT returns via your intermediary
With IOSS, there is a commitment to monthly reporting of VAT. Each return must include:
- The total amount of goods sold to each EU country
- The VAT rate paid on a country-by-country basis
- The final amount due.
Your intermediary submits this one return to the EU tax authorities. They also allocate the VAT to the respective countries. Also, always submit correct sales records. Any mistake may result in penalties or even loss of your IOSS number.
Keep detailed sales records
You will be expected to maintain sales records for at least 10 years under the IOSS rules. These records should cover:
- Customer location
- Sales value
- VAT rate applied
- IOSS number used for customs clearance.
Good records will also guard you against audits and make filing every month easy.
Track compliance and update regularly
VAT rates vary, and EU regulations evolve every other time. Successful usage of IOSS implies being up-to-date:
- Periodically revise VAT rates in your checkout system
- Ensure that your logistics partners are still using your IOSS number properly.
Always consult your intermediary and solve any challenges fast.
Final remarks
Do these right and your EU customers will enjoy faster shipping, no sneaky charges, and greater confidence in your brand.
