It’s now been six months since the EU introduced major changes to how low-value goods shipped from outside the EU to European consumers were taxed. As a reminder, with effect July 1, 2021:

• the Import VAT exemption for low-value goods was removed
• the Import One-Stop-Shop (IOSS) was introduced to provide a single EU VAT registration and VAT return for low value imports (under EUR 150)
• under an IOSS registration, local EU VAT charged at the point of sale, with the rate determined by the destination country of the goods
• goods travel through a green customs channel – with fast clearance and no further VAT levied upon import
• businesses established outside the EU wanting to use IOSS need to appoint an intermediary
• marketplaces are deemed to be the supplier for VAT/IOSS purposes for imports of low value goods.

The ecommerce changes have generally been a success but not without some initial teething problems and confusion amongst businesses. For UK businesses, IOSS provided the opportunity post-Brexit to charge VAT at the point of sale without having to register in multiple EU countries and deal with complex importation and customs requirements.  As non-established ecommerce companies can’t benefit from local in-country VAT registration thresholds, there is a nil registration threshold for sales and the first Euro is taxable. IOSS has therefore enabled businesses from China, USA, India and other non-EU countries to benefit from a single VAT registration for all exports of low-value goods shipped to consumers across the 27 EU countries. 

Statistics and feedback from first 6 months

The European Commission has provided the following feedback on the first few months of IOSS:

• the new rules impacted around 1.2 million sellers
• 7,500+ businesses have registered for IOSS
• this covers 90% of regular low-value imports into the EU
• some goods have been stuck at customs
• there have been cases of double taxation with some customers also having to pay Import VAT to release and receive goods
• there have been instances of IOSS numbers being used fraudulently
• average value of goods declared via IOSS is €32
• 20 million B2C shipments of goods were managed under IOSS in the first two months.

Top 5 EU ship-to countries under IOSS

1. Germany
2. France
3. Italy
4. Ireland
5. Spain

Top 3 ship-from from countries under IOSS

1. Great Britain
2. China
3. USA

Based on the initial success of IOSS, it is possible that the EU could in the future remove the EUR 150 threshold and also make its use compulsory.

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