The VAT exemption for low-value goods (€10/€22) imported into the European Union (“EU”) will be abolished as from 01 July 2021 and consequently, all commercial goods imported into the EU from a third country, or third territory will be subject to VAT, irrespective of their value. In this regard, a new concept of distance sales of goods imported from third countries, or third territories was introduced.
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 €150.
What is the IOSS?
The scheme, also known as the import scheme, allows suppliers and electronic interfaces selling imported goods to customers in the EU to collect VAT on distance sales of imported low value goods from the customer and declare and pay this VAT via the IOSS. Once the IOSS is used, the importation of low value goods into the EU is exempt from VAT, as VAT would have been paid as part of the purchase price by the customer.
The use of this special scheme (IOSS) is not mandatory.
Which goods are covered by the import scheme?
Distance sales of goods that are:
- Dispatched or transported from outside of the EU at the time they are supplied
- Dispatched or transported in consignment of an intrinsic value not exceeding €150
How can you register for the IOSS?
Both online sellers and electronic interfaces can register for the IOSS portal in the Member State of Identification, which is the Member State in which the taxable person has established his business.
However, if the taxable person has not established his business in the EU, an EU-established intermediary needs to be appointed for the purposes of fulfilling the pertinent VAT obligations under the IOSS.
What you need to do if you use IOSS (distinguishing between being an online seller and an electronic interface?)
| Online Sellers | Electronic Interfaces |
| Show the amount of VAT to be paid by the buyer in the EU | Show the amount of VAT to be paid by the buyer in the EU |
| Ensure the collection of VAT from the buyer on the supply of all eligible goods that have an EU Member State as their final destination | Ensure the collection of VAT from the buyer on the supply of all eligible goods that have an EU Member State as their final destination |
| Ensure that all eligible goods are shipped in consignments with a value not exceeding €150 | Make sure that eligible goods are shipped in consignments not exceeding €150 threshold, even if this total is only achieved by more than on item. |
| To the extent possible, the invoice should show the price paid by the buyer in EUR | To the extent possible, the invoice should show the price paid by the buyer in EUR |
| Submit an electronic monthly VAT return via the IOSS portal of the Member State where you are registered for IOSS | Submit an electronic monthly VAT return via the IOSS portal of the Member State where you are registered for IOSS |
| Make a monthly payment of the VAT declared in the VAT return to the Member State where you are registered for IOSS | Make a monthly payment of the VAT declared in the VAT return to the Member State where you are registered for IOSS |
| Keep records of all eligible IOSS for sales for 10 years | Keep records of all eligible IOSS for sales for 10 years |
| Provide the information required for customs clearance in the EU, including the IOSS VAT identification number, to the person declaring the goods at the EU border. | Collaborate with the actual seller of the good(s) to ensure that the information required for customs clearance in the EU, including the IOSS VAT identification number, reaches the EU customs where the goods will be imported to |
INTERMEDIARY CONDITIONS IN MALTA
VAT Import One-Stop-Shop (IOSS) Intermediary conditions guidelines please click here.
Matthew Zampa
Partner
