IOSS VAT rules facilitate the growth of e-commerce to the European union. Simplified rules are levelling the playing field between postal imports, commercial imports and EU sellers. The new rules, effective July 1st, actually present a great opportunity for Canadian and US sellers shipping to Europe (and the UK). Over 70% of EU population purchase online and Canadian goods are a popular option.
The EU has recognize the need to recognize all 27 member countries as a single digital marketplace.
What is European VAT?
Value-Added Tax (VAT) is a consumption tax levied by all European countries. Each country sets its own rules and rates with some standardization based on EU directives. VAT is typically to the sale of goods and services. This includes imported goods like electronics and clothing. Businesses can most often claim back pay VAT paid for their purchase. The end consumer ultimately bears the final tax burden.
What are EU VAT rules for e-commerce?
VAT is applied to all goods imported to the EU.
What is IOSS?
The Import One Stop Shop (IOSS) allows businesses to declare and pay Value Added Tax (VAT). It simplifies the process of importing goods into the EU. Businesses can complete customs declarations and pay applicable taxes in a single transaction.
The IOSS program streamlines the processes for declaring and paying VAT for transactions outside the EU.
For IOSS, the online marketplace is considered to have made the sale. As the merchant, the marketplace is responsible for the payment of VAT.
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Do I need to charge VAT to my customers in Europe?
Online transactions to European and UK customers should include VAT. In fact, charging VAT lends credibility to your site as Europeans expect to see it.
How to Register with the EU VAT's IOSS?
VAT process. Registration for all distance sales of imported goods to your EU customers is via any EU Member State.
An IOSS Number is important, but what exactly is it and why?
The Import One Stop Shop (IOSS) number only applies under specific conditions.To get an IOSS number, the first step is to register for the IOSS portal in an EU Member State. An EU intermediary is required to manage the process for business based in Canada. Jet can assist with contacting a VAT specialist for your company.IOSS can assist with Optimizing your VAT compliance and recovery processes.
Benefit from having an IOSS number.
If you qualify for the IOSS and have VAT obligations, managing VAT becomes more seamless and efficient with the IOSS.In some cases, e-commerce businesses may need to consider various advanced VAT mechanisms when accounting for VAT.
IOSS numbers work for your customers in what way?
IOSS not only makes international shipping easier. It also makes pricing clearer for your customers. When they make the purchase, they will simply pay all VAT due on their goods. Thus avoiding import fees upon delivery.
Ship Canadian Online Orders To Europe direct from Canada
Disclaimer: The information in Jet Worldwide online content, including this post, is for general information only.
A short history of e-commerce to the EU
The explosion of e-commerce shipments Asia to Europe too advantage of duty free clearance. Also with no VAT. The €22 duty and VAT free threshold was a loophole being exploited.
Member states where given with a lot of discretion with regard to low value imports which resulted in unequal treatment and unfair advantages. Under valued consignments e-commerce orders imported without VAT or duty and then transited throughout the EU for delivery. Furthermore, the technology used by some member states were manifest based making targeting and enforcement difficult.
Registering for IOSS
To use the IOSS, businesses must first register on the system and obtain an Economic Operators Registration and Identification (EORI) number. The EORI number is a unique identification number assigned to businesses that engage in cross-border trade in the EU.
Once registered, businesses can use the IOSS to declare and pay VAT and import duties on their imported goods. The system calculates the applicable taxes. Tariff calculation is on the value and type of goods being.
The IOSS is available to businesses importing goods into any EU member state. It is particularly useful for small and medium-sized enterprises. It simplifies the process of importing goods into the EU. Businesses save time by eliminating the need to deal with multiple national customs authorities.
IOSS not needed for shipping direct to France and other EU Countries
For Canadian merchants who ship only to one EU country, registration with IOSS is not necessary. Quebec sellers can sell direct to France, ship direct to France and - via Jet's clearance processes - prepay the VAT at the time of import.
Canadian sellers can meet the requirement to collect and pay VAT by paying the VAT at the time of import. See section below.
EORI Number for Imports to Europe from Canada
Before shipping from Canada to Europe it is important to verify the EORI number of the consignee. IOSS applies for shipments to consumers. A good option for many sellers is to work with a single importer and distributor for their sales to Europe.
An Economic Operators Registration and Identification number (EORI number) is an E.U. identification number. It is for businesses (economic operator) which import or export of goods into or out of Europe to and from Canada. An EORI number is part of the data set required for customs entries in all EU countries.
The EORI number exists out of two parts:
- the country code of the issuing Member State; followed by
- a code or number that is unique in the Member State
Registering for IOSS and Direct Import
Canadian and American merchants can scale their sales to the European union virtually. IOSSfacilitates the reach to the EU virtually. The clarification of the import processes is a huge benefit.
Direct Air freight shipping to the EU and UK from Canada and North America and e-commerce direct.
No Postal Clearance Advantage to UK and EU
For many Canadian and US sellers, shipping via postal packets was the best option as "postal clearance" offered advantages. The new rules are designed to enable better risk analysis by mandating compliance for both postal and commercial carrier clearance. The uneven playing field and being able to take advantage of lax customs oversight was not sustainable.
European postal operators are handling the import duties from the postal delivery. A completely separate function from transport and delivery. Several postal operators are charging presentation fees for shipments registered with IOSS.
- IOSS to France and EU is not Mandatory but a great tool for shipping to Europe.
- Contact our team for information on shipping direct and assistance with IOSS registration via Jet.
- IOSS: Vat payment occurs at online check out.
- Marketplace Deemed supplier
- Voluntary
- Upon registration, IOSS will apply for all their shipments up to 150 euros.
- VAT remittance is due at importation.
What does not change for shipments to the EU?
There is no change in duty, only VAT. Goods valued over €150 are still subject to duty. Keep in mind that Canadian origin goods may qualify for duty free import under CETA (contact our team for details).
- IOSS is only for business to consumer sales. Business to business shipments import processes remain the same.
Additional things to know about IOSS and shipping e-commerce to Europe
If you register for IOSS, then all your shipments must use IOSS processes
- Only one IOSS is necessary to all EU members
- Non EU companies need to appoint an intermediary to register on their behalf
- Security of IOSS number. It is important to protect your IOSS number and monitor potential fraud.
- Data quality is important with using IOSS.
Adjustments to EU customs processes and legislation:
In addition to tax revenue collections, the dramatic increase in shipments has given rise security concerns. New "7+1 processes" and preloading security and risk analysis are in effect. These requirements will expand from express and postal consignment to ocean.
Read More: Understanding import duty calculation.
Duty Free Import of e-commerce shipments under CETA
The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is a free trade agreement between Canada and the European Union (EU). It removes barriers to trade. Under CETA, Canada origin goods can clear duty-free into the EU from Canada. This includes e-commerce shipments.
Read More: Certification of Origin Explained
Excise Tax to EU and IOSS:
Goods subject to excise goods (such as alcohol) are not part of IOSS. VAT and excise apply.
Steps for Registering for Import One Stop Shop:
- Register with an EU Fiscal Representative: Marketplaces and direct to consumer sellers outside the EU must appoint an EU fiscal representative.
- Obtain an IOSS VAT ID Number: Note, although not necessarily confidential, sellers should beware of fraud and potential misuse of this information.
- Show the VAT rate and total due at check out: This transparency also meets the requirements related to consumer protection.
- VAT collected by seller: The buyer pays the VAT due at checkout (point of sale).
- VAT and IOSS part of Data set required by EU customs. The required advance data /EAD is for customs. It includes the IOSS VAT ID number.
- Monthly report and payment: The suppliers EU fiscal representative must submit an electronic VAT return on behalf the supplier along with payment.
- Data storage: The data must be digitally stored for 10 years
Jet Worldwide facilitates IOSS registration for our Canadian customers using our direct e-commerce shipping options.
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