The New VAT Rules From 1st July 2021
The Import One Stop Shop
The Import One-Stop-Shop (IOSS) was created to facilitate and simplify the declaration and payment of VAT for distance sales of imported goods with a value not exceeding EUR 150.
- The IOSS facilitates the collection, declaration, and payment of VAT for sellers that are making distance sales of imported goods to buyers in the EU.
- The IOSS also makes the process easier for the buyer, who is only charged at the time of purchase and therefore does not face any surprise fees when the goods are delivered.
- If the seller is not registered in the IOSS, the buyer has to pay the VAT and usually a customs clearance fee charged by the transporter at the moment the goods are imported into the EU.
From 1st July 2021, VAT exemption for the importation of goods to the EU of a value up to €22 will be removed.
The Import One-Stop-Shop (IOSS) offers a solution to businesses selling goods in the EU and to comply with this new VAT rule.
All goods imported to the EU will be subject to VAT.
- VAT for goods up to a value of €150 must be charged at the point of checkout.
- The correct VAT rate is the local rate where the goods are to be delivered.
|Previously (Under €22)||From 1st July (Under €150)||From 1st July (Over €150)|
|• No VAT||• VAT||• VAT|
|• No customs clearance||• Formal clearance||• Formal clearance|
|• Customs clearance fee||• Customs clearance fee|
|• IOSS can apply||• Customs duties|
|• IOSS can NOT apply|
The value of the good is also referred to as the intrinsic value.
- This does NOT include the transport or insurance costs.
- If the intrinsic value of the good is under EUR 150 IOSS can apply.
- VAT, however, is applicable on transport and insurance costs.
|Receipt A||Receipt B||Receipt C|
|Value of good: €100||Value of good: €100||Value of good: €160|
|Transport costs: €30||Transport costs: €30|
|Insurance costs: €30|
|VAT (20%): €20||VAT (20%): €38||VAT (20%): €38|
|Total: €120||Total: €192||Total: €228|
|IOSS can apply - As the intrinsic value of the good is under €150.||IOSS can apply - As the intrinsic value of the good is under €150.||IOSS can NOT apply - As the intrinsic value of the good is over €150.|
|The VAT rate is applied to the value of the goods PLUS the transport and insurance cost.||The VAT rate is applied to the value of the goods PLUS the transport and Insurance costs.|