Effective July 1, 2021, Value-Add Tax (VAT) is charged on all commercial goods imported into the EU, regardless of value. For consignments with a value of €150 or below, this can either be charged at the time of the sale by using the new Import One-Stop Shop (IOSS) or be collected from the end-customer by the customs declarant (FedEx).

If your business is based in the U.S. or anywhere else outside the EU, are no longer able to export shipments valued under €22 to EU consumers free of VAT.

You’ll have two options for collecting and paying VAT for e-commerce sales of €150 or below.

• The new Import One-Stop Shop (IOSS) lets any seller or online marketplace charge VAT at the point of sale and pay it directly to the tax authorities. This makes the process simpler and more transparent for your customers and helps ensure efficient customs procedures.
• If you do not use IOSS, FedEx will collect the VAT from the customer prior to delivery and pay it to the tax authorities.

To simplify collecting and paying VAT, you’ll need to sign up for IOSS.

• To sign up for the IOSS, you’ll need to already be registered in an EU member state. 
• If you’re not, you’ll need to appoint a third party intermediary to register and declare the VAT on your behalf. 
• You’ll then need to provide your IOSS number to the customs declarant (FedEx) when shipping to the EU.

With IOSS, VAT for EU sales is submitted via a monthly tax return in the nominated EU member state, which will then forward the VAT declaration and payment to the appropriate countries. 

As a result, you’ll no longer have to register for VAT in every EU country you sell in.

An online marketplace is simply an online platform that facilitates the sales transaction, allowing you to sell your goods directly to customers.

Certain marketplaces, rather than their sellers, are now responsible for collecting, reporting and remitting the VAT due from the end-consumer if they register with the IOSS. This would apply for sellers of goods up to €150.

If you sell through a marketplace that has signed up for the IOSS, you’ll need to provide the marketplace’s IOSS number to the party responsible for making the customs declaration (FedEx).

If you use several marketplaces to sell your goods, be sure to keep clear evidence of the sales carried out via each. You should also provide the corresponding IOSS number for each sale to the customs declarant.

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

Please note that, under the terms of the EU-UK Joint Protocol, Northern Ireland remains part of the EU VAT area for goods. This means that these new provisions also apply to goods imported into Northern Ireland from the rest of the world.

The information provided does not, and is not intended to, constitute legal and/or tax advice; instead, this information is for general informational purposes only. This information may not constitute the most up-to-date legal or other information. Readers of this information should contact their own advisor to obtain advice with respect to any particular legal and/or tax matter. All liability with respect to actions taken or not taken based on the contents of this site are hereby expressly disclaimed. The content on this posting is provided “as is”; no representations are made that the content is error-free.