Understanding IOSS in Europe: Compliance and customer satisfaction

2021-07-22

Written by Starshipit

Editor’s note: This blog was updated in October 2022 to provide the most accurate information and additional detail.

The Import One-Stop Shop (IOSS) is the electronic portal you can use from 1 July 2021 to comply with your EU VAT (Value-added tax) eCommerce obligations. If you sell products to countries within the EU then this blog is for you.

Once you’ve registered for the IOSS you will have a unique IOSS number which you’ll need to include in your shipment documentation for shipments entering the EU from non-EU countries.

This means your shipment’s customs documentation must include the IOSS number of the marketplace or online store where the order was placed.

In this article, we’ll show you how to easily set up Starshipit for IOSS so you can remain compliant when shipping to customers in the EU.

You can find more details about IOSS on the European Commission Taxation and Customs Union website.

What is IOSS?

The purpose of the IOSS is to allow suppliers and electronic interfaces to collect, declare and pay VAT charges to the tax authorities when selling goods to buyers in the EU.

Previously, buyers would pay the VAT at the moment goods were imported into the EU (for any products over 22 EUR).

How do I register for IOSS?

You can register your business on the IOSS portal of any EU Member State. If your business is not based in the EU, you will need to appoint an intermediary established in the EU to fulfil your VAT obligations under IOSS.

The IOSS registration is valid for all distance sales of imported goods to buyers in the EU.

What if my business isn’t based in the EU?

Not based in the EU? That’s OK. You'll just need to register as a ‘non-Union taxpayer’ with the tax authority of any EU member state. Then, you can file a regular domestic VAT return each quarter, the same as any EU e-commerce seller.

You’ll also be required to file in at least one EU member state. VAT incurred on imports may also be declared in the IOSS.

Setting up IOSS numbers for each marketplace you sell through

Starshipit supports IOSS tax numbers so you can stay compliant with these requirements simply by following your usual shipping process. If you sell through multiple channels, you can also set IOSS numbers for each marketplace you sell through. As an example, you can set up IOSS for both Amazon and Shopify.

Starshipit automatically transmits an order’s IOSS number to your couriers so that this is available to EU customs. This happens automatically, so you won’t need to make any changes to your shipping process.

See how to Set up Shipper Tax Numbers in Starshipit.

Automating IOSS using the Starshipit rules engine

Let’s say you receive orders from Amazon, Shopify and eBay. Starshipit already imports these into your account for you. Now you can set which IOSS number should be assigned to each individual order on import.

You can easily set this up using Starshipit’s rules engine. You may already be using rules to automate things like choosing the cheapest courier or assigning express orders to your express shipping service.

Back to our IOSS example. Let's say you receive orders from three different marketplaces. You can set up three rules to assign the right IOSS number to each order. Once set up these rules will be applied to all orders that are imported into Starshipit with a destination inside the EU.

The Conditions, Actions and Values for your three rules will look like this:

Amazon
  • Condition: Integration | Equals | Amazon
  • Action: Set Shipper Tax Number
  • Value: IOSS – Import One-Stop-Shop | Amazon’s IOSS number
Shopify
  • Condition: Integration | Equals | Shopify
  • Action: Set Shipper Tax Number
  • Value: IOSS – Import One-Stop-Shop | Shopify’s IOSS number
eBay
  • Condition: Integration | Equals | eBay
  • Action: Set Shipper Tax Number
  • Value: IOSS – Import One-Stop-Shop | eBay’s IOSS number

Once set up, these rules will automatically assign the correct IOSS number for each order on import. This is then automatically included in each shipment's customs documentation.

How IOSS works with your couriers

When you send shipments internationally a commercial invoice is automatically created. This serves as a contract and a proof of sale between the buyer (your customer) and the seller (you). This is also required for customs clearance purposes to calculate and assess the duties and taxes due.

Starshipit generates commercial invoices for you when you print labels for international shipments. Some couriers such as DHL Express allow you to use Paperless Trade. Once enabled, Paperless Trade means that your commercial invoice information is transmitted electronically rather than requiring a printed commercial invoice.

IOSS works in a similar way. When your labels are printed from Starshipit the IOSS number selected will be transmitted to your courier electronically. Your courier then makes the package’s IOSS information available to EU customs when your shipment enters the EU.

Shipping from Australia into the EU

Using IOSS is mandatory for all shipments entering the EU from 1 July 2021, so if you’re sending orders from Australia into the EU you’ll need to make sure you’re compliant.

You’ll need to check which marketplaces you currently sell through then find or register the IOSS numbers for each one. This includes your own store if you sell directly from your website.

Once you have your IOSS numbers you can set them up in Starshipit by following the steps outlined above. These IOSS numbers will only be added to orders going into the EU so won’t be transmitted on your domestic orders or orders being sent to countries outside the EU.

How does IOSS work in practice? A look at two examples

1. Shipping goods directly to the EU

Retail Co sells goods worth €150 or less and ships their goods to the EU from Australia.

When an EU based customer purchases an item from Retail Co’s store, the total purchase price will include the applicable VAT at the point-of-sale (in this case, the shopping cart). Retail Co then declares the VAT in IOSS.

Retail Co is now exempt from paying import VAT at customs, and their EU customer does not have to pay any additional manual handling surcharges to receive their order.

2. Selling goods in the EU through an online marketplace

Pet Supplies Global sells their items through an online marketplace (like Amazon).

The marketplace may collect the VAT and pay directly on behalf of Pet Supplies Global.

If the item is below €150, and the Amazon is registered with IOSS to collect the VAT, no additional fees beyond point of purchase will be required by either Pet Supplies Global or the EU buyer.

For consignments exceeding the €150 IOSS threshold, the import VAT must still be paid to customs.

Your Marketplace will pay VAT on your behalf and will provide you with the IOSS number related to that purchase. This must be included as the importer reference number when lodging the customs declaration form.

Frequently asked questions

Does Starshipit support the VAT requirements introduced on 1 July 2021 (IOSS, Import One-Stop-Shop)?
I’ve got multiple IOSS numbers, can I use more than one IOSS number?
Can I use the IOSS for every item I send to the EU?
Why isn’t my IOSS number showing on the label for my order?
I only ship to countries outside of the EU, will I need to do anything?
Is the courier I use currently supported?
What do I do if my customer is charged for tax but I’ve already paid the VAT to the IOSS?

Ship smarter and grow faster

Staying IOSS compliant while continuing to get your orders out the door is just another way Starshipit’s automated shipping and fulfilment platform helps you get more done, and deliver better shipping experiences.

If you’d like to keep up to date with newly released feature, or if you’d like to request a new feature, check out our Changelog and Feedback board.

For more helpful tips and tricks check out our Knowledge Base.

Starshipit

Starshipit

Starshipit is the best practice shipping and fulfilment platform that helps retailers save time and deliver great shipping experiences.

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