IOSS VAT AND CUSTOMS CLEARANCE

Wait… What’s going to change on July 1?

Appoint B2C Europe as your IOSS agent and we will take care of the rest

As of today, customers of B2C Europe can request an I-OSS number via our system and our connection with the customs authorities. E-commerce sellers, re-sellers or marketplaces can appoint B2C Europe as their IOSS agent and we will take care of the rest. Also companies like carriers, consolidators and other logistic companies can engage with B2C Europe regarding the IOSS. We will then request an IOSS number on behalf of your customers. Not yet familiar with IOSS and the new VAT rules? Then read all the insights, shared by B2C Europe’s customs experts.

What happens on July 1, 2021?

Until now, according to the old VAT rules, no import VAT had to be paid for goods with a value of up to 22 euros. This will change, because from July 1, 2021 the exemption for shipments under 22 euros will disappear. This means that you will also have to pay VAT for products with a low value. The Import One Stop Shop (IOSS) is established to facilitate and simplify the tax declaration and payment of VAT for distance sales of imported goods with a value of up to EUR 150. The IOSS covers products shipped or transported from outside the EU at the time of sale, products with a value not exceeding 150 euros and not subject to excise duties (e.g. alcohol or tobacco).

Why are the VAT rules changing?

Products sold from outside Europe that are sold via the internet below the exemption limit were not subject to VAT in the past. But if exactly the same product is in the store, then the products are subject to VAT. Various stakeholders therefore see the difference between offline and online sales as a form of competition distortion. As a consequence, the stakeholders have been proved right and from July 1, 2021 the 22 euro threshold will disappear. Then there is a level playing field, which means that identical goods from within and outside Europe are taxed equally, both offline and online.

The green lane solution

The removal of the import VAT threshold is doubtless the change with the biggest impact on customs clearance formalities. As result of this provision, all commercial goods imported into the EU, regardless of their value, are subject to VAT as of July 1, 2021. In order to allow VAT to be levied, all imports into the EU will have to be declared at the border using an electronic customs declaration. For this procedure the “super-reduced data set” (H7 Dataset) containing 24 data elements is introduced. This simplified dataset is applicable for parcels up to EUR 150 and when the IOSS scheme is used. Because the customs clearance process will be a simplified and automated procedure, this is called the “green lane” solution.

Centralized clearance & entry ports

B2C Europe can act as customs representative (direct or indirect) on behalf of your e-commerce store or e-commerce customers in order to declare the products to customs in the country of import. We offer a centralized customs clearance solution in the Netherlands and Belgium, which means that you do not have to clear your products in every destination country separately. B2C Europe can perform the customs clearance in the Netherlands and Belgium with the use of the H7 dataset through a direct IT integration with local Customs authorities. We are currently developing the exact same solution in France (Paris), Spain (Madrid) and Italy (Milan).

In the Netherlands and Belgium, we can clear each consignment on an individual level using an automated process that allows us to pre-clear your parcels before they arrive, so called pre-lodged customs declaration. This way we prevent any additional formalities at the moment of import that may increase the handling time and delay the delivery of the parcels. This pre-lodged customs declaration is also valid for the H7 dataset. Customs will have the possibility to carry out the pre-arrival risk analysis and consequently identify high-risk consignments and allow the swift release of low-risk goods immediately after their presentation.

  • Appoint B2C Europe as your IOSS agent
  • You can focus on the core of your business
  • Expert advice on IOSS and customs clearance
  • Reliable and fast clearance services
  • Avoid surprises, prepare well

IOSS ID Number

The IOSS VAT identification number of the company selling the products, or the marketplace is one of the data elements of the H7 dataset. By using this IOSS number, B2C Europe can ensure that the importation of the goods declared is exempted from VAT. Customs authorities may perform checks to see if the conditions for the VAT exempt importation and, if applicable, the conditions for the use of the specific customs declaration are met.

The validity of the IOSS VAT identification number provided in the customs declaration is checked electronically by the customs authorities against the IOSS VAT identification number registry. The database will contain all the IOSS VAT identification numbers assigned by all EU countries.  If the IOSS number is valid and the intrinsic value of the consignment does not exceed EUR 150, the customs authorities will not request the payment of VAT on low value goods imported under the IOSS.

The actual VAT payment will be performed by B2C Europe as IOSS VAT agent by submitting a monthly filing to the Tax authorities. The Customs authorities will create a monthly listing containing the total value of imports of low value products declared in the EU country of import for each IOSS VAT number during a given month. This listing will be made available to tax authorities in the EU who will compare this data with the value of the VAT declared in the IOSS return by the same IOSS number. In the end, the Tax authorities will take care of the distribution of the collected VAT to the authorities of the destination countries.

Administrative burden

All products under € 150 can be declared throughout Europe in the single IOSS. The VAT rate applied for each transaction should be based on the end user’s country of residence. The online entrepreneur who receives the VAT is obliged to transfer it to the EU. Therefore, you have to submit a declaration twelve times a year to the tax authorities of the member state where you are registered with your IOSS VAT number. In order to minimize the administrative burden, you only have to register and pay VAT in one country.

The tax authorities receive VAT and an appendix stating exactly how it should be redistributed among the various European member states. To verify this, the tax authorities will compare this with the import data from the customs authorities. That is why it is essential to register all your products correctly and digitally!

Encrypted IOSS number to protect against fraud

Unfortunately, the way the I-OSS scheme is currently set up, makes the system subject to fraud and misuse. B2C Europe identified the risk that the holder of the IOSS number can be held responsible for the VAT payment on shipments coming into the EU containing their IOSS number while the actual sales are not performed by the marketplace or seller connected to this IOSS number. Therefore, it is very important that the IOSS VAT identification number is securely transmitted between involved parties before being communicated to the customs authorities. This to prevent fraud and misuse of the IOSS number by other companies.

Communication of the IOSS VAT number should be kept to the minimum necessary. Consequently, it should only be transmitted to the parties in the supply chain that will need it for the release for free circulation in the country of importation.

B2C Europe as IOSS agent and customs agent has developed specific solutions for e-sellers and marketplaces in order to fully protect the IOSS number from fraud and misuse. This way you will not have to establish contractual agreements and strict rules regarding the use of your IOSS VAT number with your underlying suppliers or transport companies. The exact services strongly depend on your IT environment and we can provide you with more detailed information on request. In the medium term, the EU is working on introducing a direct exchange of information between sellers / marketplaces and customs authorities regarding the IOSS number, which will be similar to the services that B2C Europe has developed.

Monthly listing as IOSS agent

The IOSS reporting will be a monthly VAT filing submitted to the Dutch tax authority. As IOSS agent, B2C Europe will perform this monthly listing and file the correct VAT returns. B2C Europe will perform periodical VAT checks on the data provided to ensure a fully compliant VAT payment procedure. B2C Europe requires the transfer of the sales VAT due in order to make the monthly VAT payment to the Tax authorities. Depending on the monthly volume, we might require a deposit, this will be agreed upon in a separate engagement.

B2C Europe and the seller / marketplace would need to make a separate agreement on the record keeping obligation of 10 years of all eligible IOSS sales of imported goods to cater for possible audits by EU tax authorities. Both companies are responsible in that respect.

B2C Europe will also fulfil all the obligations laid down in the legislation of the IOSS scheme as intermediary. Both the seller/marketplace and B2C Europe remain liable for the VAT obligations, including the payment of VAT together.  A separate power of attorney is needed to finalize the appointment of customs declarant and acting as IOSS agent on behalf of the seller / marketplace.

Avoid surprises, prepare well 

B2C Europe has developed a customs clearance solution for the import of products into the EU that is fully compliant with the new upcoming VAT & customs regulations, including:

  • The new VAT marketplace regulations (VAT deemed supplier). 
  • The H7 dataset for customs clearance (reduced data set).
  • The IOSS VAT reporting requirements.

You can appoint B2C Europe as your IOSS agent and we will take care of the rest. Contact one of our IOSS experts to discuss your logistics needs!

B2C Europe as your IOSS agent

  • Request an I-OSS number via our system
  • We will take care of the rest
  • Expert advice on IOSS customs clearance
  • B2C Europe, leading independent logistics service provider since 2000

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