The Import One-Stop Shop (IOSS) is the electronic portal businesses can use from July 1st 2021 to comply with their VAT e-commerce obligations on distance sales of imported goods.
The IOSS allows suppliers and electronic interfaces selling imported goods to buyers in the EU to collect, declare and pay the VAT to the tax authorities, instead of making the buyer pay the VAT at the moment the goods are imported into the EU as it was previously the case (for products over 22 EUR).
How does this impact my business?
There are a number of changes as a result of the IOSS that go into effect on July 1st, 2021 including:
- The value added tax (VAT) exemption for the importation of goods not exceeding EUR 22 will be removed.
- Any item sold to the EU from outside the EU with a value up to 150 EUR is subject to:
- Formal clearance
- Customs clearance fee
- Any item sold to the EU from outside the EU with a value above 150 EUR is also subject to customs duties.
- If your marketplace(s) or your online store does not facilitate VAT charges, the end customer will be responsible for related fees.
Note: The above is not meant to be an exhaustive list. Please refer to your tax professional(s) for additional information and implications.
How does this impact my Brightpearl account?
If you sell through a marketplace
From July 1, 2021, Amazon will collect VAT on the sales of goods delivered to B2C customers in the EU, ordered through any Amazon store, where:
- Goods are delivered from inventory stored outside the EU in a shipment with an intrinsic value of up to EUR 150 - this is referred to as the Import One Stop Shop; or
- Goods of any value are delivered from inventory stored in the EU where you, the Selling Partner, are not established in the EU.
- Amazon's IOSS VAT Identification Number will have to be stored against every Amazon sale using a custom field. After creating the custom field, you'll have two ways of updating it: through Automation (additional information below) or by manually updating orders.
For additional information, please refer to Amazon’s VAT education website.
- The current VAT exemption for imports of goods small consignment of value of up to €22 into the EU will be abolished.
- eBay will collect and remit VAT for imports of consignments up to a value of €150 shipped into the EU and sold to consumers.
- eBay's IOSS VAT Identification Number will have to be stored against every eBay sale using a custom field. After creating the custom field, you'll have two ways of updating it: through Automation (additional information below) or by manually updating orders.
For additional information, please refer to Ebay’s latest seller updates.
If you sell through an online store (Shopify, BigCommerce, Magento)
Below is a list of possible changes to be aware of:
- If you are collecting VAT through an online store, you’ll have to opt into IOSS to remit VAT accordingly.
- You will be required to pass your own IOSS VAT Identification Number to couriers, typically through a custom field. After creating the custom field, you'll have two ways of updating it: through Automation (additional information below) or by manually updating orders.
- Set up and configure the relevant tax codes for each EU member state you sell into.
- Ensure each EU member state country has a tax zone set up.
- Ensure the tax zone is assigned to the relevant country.
- Ensure the tax codes are not a part of the VAT tax regime (they can be added to a separate tax regime for easy reporting).
If you are not collecting VAT through an online store, the end customer will be responsible for the associated fees.
Creating an IOSS VAT Identification Number custom field
You can create a sales order custom field to store a marketplace’s IOSS VAT identification number against relevant orders. This field can then be passed to shipping integrations and/or integrated 3PLs.
To create the custom field:
- Go to Settings > Custom fields > Sales
- Choose Add a field
- Enter a name, e.g. “IOSS number”, and choose a tab and code for the field
- Select Freeform text as the field type
This will now be available to edit on any sales order via the custom fields tab:
Creating an Automation rule to update the IOSS number on sales orders
If you use Brightpearl Automation, it’s possible to configure a rule that will automatically update the IOSS number custom field based on the channel where the sale originated. Before doing this, have the IOSS number for each relevant sales channel handy.
To create the rule:
- Go to Settings > Brightpearl apps > Automation
- Choose Create new rule
- Enter a name, e.g. “Set IOSS number”
- If using Automation triggers, ensure this is set to Sales Order
- Click Add condition and select Channel from the dropdown
- Select the relevant sales channel
- Add an action, choosing Update custom field from the dropdown
- Under Type, select Sales
- Select the custom field you created earlier and enter the IOSS number4. Then save and activate the rule
Any new orders created via the selected sales channel will now have the IOSS custom field automatically populated with the number entered in the rule.
Repeat this process to create new rules for additional channels.