VAT and applying the IOSS or OSS schemes

Understand the differences between the one stop shops

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From 1 July 2021, the VAT exemption for the importation of goods with a value not exceeding EUR 22 is removed. As a result, all goods imported to the EU will be subject to VAT.

The Import One-Stop Shop (IOSS) is created to facilitate and simplify the declaration and payment of VAT for distance sales of imported goods with a value not exceeding €150.

Where the goods are supplied via an online marketplace (such as Amazon), the marketplace is responsible for accounting for the local VAT via their own one stop shop registration. Goods on which VAT is accounted for under IOSS benefit from a VAT exemption upon importation, allowing faster customs processing.  

Difference between IOSS and OSS

Import One-Stop Shop (IOSS)

IOSS is designed for non-EU companies who sell goods to non-VAT registered customers in the EU, of a value of €150 or less. This would include companies based in Great Britain.

For goods of a higher value, standard VAT import rules apply. 

Businesses using the scheme VAT have to register in one member state, using a local intermediary, and submit a local VAT return for that member state and a one stop shop return for all other member states, declaring and paying over VAT at the applicable local rate. Access information on the VAT rates in the EU. The IOSS registration is valid for all distance sales of imported goods made to buyers in the EU.

When you’re registered, you will receive a unique IOSS identification number to put on all packages under €150 sent to the EU. To use IOSS you need to calculate and charge VAT at point of sale. The invoice needs to be submitted with the package at customs.

In a nutshell, the IOSS covers distance sales of goods that are:

  • dispatched or transported from outside of the EU at the time they are sold (GB is a third country, different rules apply to Northern Ireland)
  • dispatched or transported in consignments with a value not exceeding EUR 150 (this is the total value of the shipment, not the value of each item within a shipment, so if an order comprises two items each of EUR 100, that order will be subject to import VAT)
  • not subject to excise duties (typically applied to alcohol or tobacco products).

So, if you are a business based in the UK, you can normally use the IOSS through the appointment of an EU established intermediary. More details for the scheme and registration can be found here.

One-Stop Shop (OSS)

OSS (One-Stop Shop) is designed for companies based in the EU selling goods to customers in other EU countries. This would include companies based in Northern Ireland.  

Depending on your location, you will either need to use OSS or IOSS. 

How to register for OSS if you are based in Northern Ireland

The Northern Ireland Protocol means that Northern Ireland maintains alignment with the EU VAT rules for goods, including on goods moving to, from and within Northern Ireland. However, Northern Ireland is, and will remain, part of the UK's VAT system. HMRC has detailed guidance for the registration process for OSS from Northern Ireland as below:

Businesses will need:

  • to tell HMRC they will be selling goods from Northern Ireland
  • their UK VAT registration number
  • their name and permanent place of business
  • the Government Gateway user ID and password they used to register for UK VAT
  • their bank details including bank identifier code (BIC) and account number (IBAN).

Businesses must apply to register by the 10th day of the month after their first eligible supply, to be able to use the OSS for that supply.

If an application is made after the 10th day of the month following the first eligible supply, registration will take effect from the first day of the calendar quarter after a business applied to register.

Businesses must register for the OSS themselves using GOV.UK. Agents are not able to register their clients. 

The EU member states are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.

Useful resources

ACCA has published guidance on crossborder VAT in 2020 and beyond.