EU VAT rule change and Import One Stop Shop (IOSS)
Helping you get ready for the EU’s VAT e-commerce changes on 1 July 2021
Changes to EU Value Added Tax (VAT) are coming to businesses selling goods to customers located in the EU. The changes will take effect on 1 July 2021. We have three options available to help you manage these changes – depending on the size and nature of your business.
The EU's Import One Stop Shop (IOSS) can help you start, or continue, trading from GB into the EU. You can either register, via an intermediary, and file your own tax returns, or we can assist you to do so, via the new IOSS Registration and Filing Service detailed below – offered by Deloitte. If you register yourself, all you need do is to input your IOSS number into the correct field, where requested
If you don't want to register yourself, we also have Taxamo Assure, an innovative pay-as-you-go solution which is perfect if you simply want to concentrate on selling. It does the heavy lifting for you. All you need to do is to pay a fee per parcel. See below for further details.
Whichever IOSS solution you choose, Parcelforce Worldwide can take your items and ensure they get delivered across the EU without delay.
What happens if I don’t act?
If you don’t want to register for IOSS you can just carry on as before with our europriority (delivery duties paid) and euroeconomy (delivery duties unpaid) services. If using euroeconomy, your customers may have to pay import VAT (and customs duties, if payable) and a handling fee in the receiving country. These charges will depend on the country you are sending to, the value of the item and whether it is a gift or commercial goods.
What should I do?
In response to the 1 July 2021 changes, if you are a business who sells to customers in the EU, you have several options to consider.
1. Selling through a marketplace
If you sell through a marketplace, they are likely to have registered for IOSS. If so, you just need to input their IOSS number in for the items sold through that marketplace. Whether you book your parcels online, or pay over-the-counter at your local Post Office, you’ll be guided through the process to ensure your items have the correct IOSS details.
2. The Import One Stop Shop (IOSS)
You can register yourself, via an intermediary, and file your own EU VAT returns. Or, if you prefer to concentrate on selling, you may want to consider our ‘assisted’ IOSS solutions with our partners Deloitte and Taxamo. Whichever approach you choose it allows you to calculate and collect VAT from your customer at the checkout and pay it directly to the EU.
3. Delivery Duties Paid (DDP)
If IOSS isn't for you, or you are sending items above €150, DDP may be the answer. It allows you to calculate and collect VAT and customs duties from your customer at the checkout and pay it to the EU tax authorities via Parcelforce Worldwide. You may already be using DDP via our europriority service. If so, there is nothing to stop you continuing.
4. Delivery Duties Unpaid (DDU)
If the above options aren’t for you then our DDU service to the EU may suit your needs. This means the recipient pays the duties and taxes of the items you send which are collected by the delivering postal group. You may already be using DDU via our euroeconomy service. If so, there is nothing to stop you continuing.
So, what’s best for you?
Here are the different options at a glance to help you to decide what suits your business best.
Options for sending to the EU from 1 July 2021
|Options||Delivered Duties Unpaid (DDU)||IOSS - Sender Self-Registration||IOSS - Selling via a Marketplace||Delivered Duties Paid (DDP)||Assisted IOSS Solutions|
|UK sellers do not ask their customer for tax and duty. EU recipient is contacted in country and pays VAT owed before receiving item||UK seller registers for VAT themselves, via an intermediary, collects VAT and completes monthly tax returns||UK seller sells through a larger marketplace, so the Marketplace take on the responsibility for collecting and paying VAT on items with the value of €150 or below||Allows UK sellers to collect and pay tax and duty on goods that would otherwise be paid by the customer before delivery||UK seller uses trusted partners to a) provide support in registering and completing tax returns, or b) completely take care of EU VAT compliance instead of the seller, to simplify the process for collecting and paying VAT on items with value up to €150|
|Process involved||No action needed||
Integrate a landed cost calculator
Register for IOSS using a tax agent in one EU country to get an IOSS number
Register and get an IOSS number
Provide IOSS number to RM in pre-advice
Account for VAT and complete monthly returns
Register to sell with a marketplace
Place your goods on their website
They take care of VAT obligations (for products up to €150)
Integrate a landed cost calculator
Register for DDP service and pay for VAT on behalf of your EU customer upfront
The EU customer receives their product without interruption before delivery
Pay a fee to a third party to:
Support you in registering and filing tax returns for IOSS for a fee/subscription OR…
Take care of VAT at point of sale and pay VAT obligations under the partner’s IOSS number
|Why do this?||
Simple option that requires no change to now
Can help you to keep costs appear low at checkout
|Saves on third party costs and often uses in house tax expertise or resources||
Marketplace takes care of VAT (for products up to €150) and IOSS number
Can simplify logistics
Offers broader market access
Useful if you have small but irregular volumes of sales or goods over €150
Maintains your customer experience
Simplifies the process of filing and registering for VAT/IOSS and ensures calculations are correct
Option for a ‘pay as you go’ solution to be ‘hands free’ of VAT
Peace of mind if wanting to register yourself for IOSS and file for VAT
Unexpected costs for your EU recipient (VAT and handling fee)
Customers can refuse to pay and item is returned
Interrupted customer experience
Specialist understanding and time is required to manage returns (handling enquiries with tax authorities, choosing where to register and file, deciding on an intermediary)
Risk of issues when completing returns
Reliance on the marketplace
Fees are taken from each sale (10% plus)
Reduced control and brand recognition
Doesn’t cover products over €150
Need to increase prices to cover the cost of VAT
Can be non-cost effective for low value parcels or larger number of parcels
Can be difficult to obtain a VAT refund when goods are returned
Requirement to complete VAT returns yourself (the returns would not be done for you but checked), unless ‘pay-as-you-go’ solution is used
Higher cost of business if choosing a ‘pay as you go’ per parcel option (but no requirement for tax return filing)
What is the EU’s Import One Stop Shop (IOSS)?
The EU’s Import One Stop Shop (IOSS) is a VAT registration scheme your business can use from 1 July 2021 to comply with the EU’s new VAT e-commerce rules on sales from GB to the EU. If dispatching goods from Northern Ireland to EU you can use the One Stop Shop (OSS). Details are still being finalised but you will not need to provide a OSS registration number to us.
The new rules could impact how you do business in the EU. You can find more information about these changes here, that the European Commission has published and here is further guidance provided by the UK Government on these changes.
Once registered for IOSS in only one EU country, VAT can be collected at your online checkout and paid on all B2C sales of goods with value up to €150 into the EU by submitting a single monthly EU VAT return. This will help to avoid unexpected charges and delivery delays to the end recipient, improving the overall customer experience.
Should you register for IOSS?
If you don’t have a solution in place by 1 July 2021, you can continue to post with Parcelforce Worldwide as you are today with either our europriority (DDP) or euroeconomy (DDU) services. Depending on which service you’ve chosen you customers may have to pay import VAT and a handling fee in the receiving country before they can receive their parcel from our delivery partner, no matter how small the value of the goods is. Some customers might refuse delivery, rather than pay the import VAT and the handling fee.
For sales you make through your own checkout you can register for IOSS yourself. There are several ways you can access IOSS. The most appropriate solution for your business will depend on your circumstances (e.g. size, scale and maturity of your business). Parcelforce Worldwide has also developed two solutions for sales you make through your own checkout that may suit your business.
The EU's Import One Stop Shop (IOSS) can help you start or continue trading from GB into the EU. You can register and file your own tax returns or we can assist you to do so. If you don't want to register yourself, we have Taxamo Assure - an innovative pay-as-you-go solution. If you haven’t already got an IOSS solution in place or your registration underway this may be the quickest and simplest solution for you in the short term. See below for further details.
What are Parcelforce Worldwide’s IOSS solutions?
You have a range of IOSS options with Parcelforce Worldwide. You can register and file your own EU VAT returns. All you need do is to input your IOSS number into the correct field, when requested, on the Parcelforce Worldwide shipping platform you use.
Or you might want to consider our ‘assisted’ solutions from Deloitte or Taxamo.
Our assisted IOSS options
A simple 'pay-as-you-go' option where Taxamo acts as the ’electronic interface’ for you - allowing you to use its IOSS number to send parcels to consumers located in the EU. For sales where Taxamo is the electronic interface, there is no need for you to register for IOSS and file tax returns. This solution will allow you to comply with the new rules and ensure a smooth delivery experience for your customers. If you have registered already for IOSS this might be the simplest and quickest solution for you in the short term – while you weigh up the various options available to you.
The IOSS Registration and Filing Service offered by Deloitte
You can sign up for Deloitte’s IOSS Registration and Filing service, which will provide you with your IOSS number and enable you to send parcels with the VAT paid to recipients across the EU. This option is recommended for businesses sending higher volumes of parcels to consumers in the EU, who do not wish to register and manage tax returns in-house. This can take up to several weeks to complete the registration process.
Assisted IOSS Solutions – Deloitte and Taxamo
|Taxamo - Assure||Deloitte - Registration & Filing Service|
|What does it involve?||
This is a hassle-free ‘pay as you go’ option where Taxamo acts as the deemed reseller
You use Taxamo’s IOSS number to send items to your customers in the EU
You pay a £2 per item which means you don’t have to register or file for EU tax (Taxamo does all that for you)
You pay Deloitte to register you for IOSS, so you can send items using your own IOSS number
Using sales and tax data from your system Deloitte will prepare and file the VAT returns for you
You pay one off fee for registration (£300), plus annual fee (£2000) for tax returns
|Why would you choose it?||
This is a great hassle-free solution for smaller senders of under 3000 parcels a year to the EU
To avoid the VAT management overhead - calculation, registration, filing and remittance
To transfer the VAT liability risk - penalties and late fees - to third party
Streamlined customer journey with seamless VAT compliance integration from checkout to delivery
You want to send higher volumes of EU items with a reduced cost per item and lower perceived tax risk
You are prepared to install or already have tax IT systems needed to calculate the VAT on sales to different EU countries
You can dedicate operational resource to managing the tax
|It may not be right if?||
You are sending a high volume of items (at a certain volume it’s likely to become cheaper to register and manage your own returns)
You already have the ‘in-house’ capability and expertise to register and file for IOSS independently
You only sell to the EU through marketplace(s)
You only send a small number of items each year
You already have the capability and expertise to register and file for IOSS independently
You only sell to the EU through marketplace(s)
How to tell us what the relevant IOSS number is for your shipment?
On our shipping platform, WDMO, the field which is currently used to enter the Shipper’s VAT or EORI number, will be modified to accept an IOSS number as well. From the 1 July it will be changed to read “Shipper/Exporter number - IOSS/EORI/VAT”.
From 1 July, you can choose either euroeconomy or europriority when creating an IOSS shipment and insert the IOSS number in the relevant field.
Calculate the landed cost of your goods with Aura from Hurricane
If you register yourself for IOSS, or register via Deloitte’s IOSS Registration and Filing service, you will need to calculate the landed costs of your goods. You can do this by using Aura from Hurricane. This service calculates all import Duty and Tax chargeable at the checkout. It also provides a Prohibited & Restricted Goods check, Denied Parties check & HS code look-up all in one API call.
If you would like to progress please ask your Account Manager for access to the Landed Cost API (Aura) and they can raise a request with our API team.
Frequently asked questions about IOSS
The chances are that you will have questions about the changes taking place in relation to EU VAT on 1 July and the options open to you. Take a look at the Frequently asked Questions and their answers to help you find the right solution for you and your business.