Customs, E-Commerce, VAT | 23. April 2021

Distance selling from a third-country and how the Import-One-Stop-Shop (IOSS) works

The new regulations that will come into force on July 1, 2021, and apply to distance sales from a third country are complex and extensive. This article introduces the Import-One-Stop-Shop (IOSS) and its application cases and limits. by

20210423 Bild Fernverkauf Drittland und IOSS schmaler
20210423 Bild Fernverkauf Drittland und IOSS schmaler

The following is a summary of the most essential regulations

Third Country Definition

  • Refers to countries outside the European Union (e.g., Switzerland, the UK, Norway, China, the USA, or Canada)

Changes to Exemption Limit

  • €22 exemption limit abolished as of July 1, 2021
  • All goods imported into EU Member States are subject to VAT
  • No exemption limit or allowance applies

Customs Declaration Requirement

  • Mandatory submission of customs declaration for all imports
  • No exemptions from the customs declaration requirement

About the IOSS

Introduction to IOSS

  • A streamlined system for simplifying VAT obligations
  • Designed for businesses participating in cross-border sales within the EU

IOSS Participation and Limitations

  • Voluntary participation
  • Applicable to imports with an absolute value of up to €150
  • Must be adopted uniformly across all EU Member States, and distance sales

Registration and Compliance

  • Registration has been open since April 1, 2021
  • Monthly filing of IOSS tax return statements required

VAT Management and Benefits

  • Single VAT return statement and payment to a central tax authority (e.g. Federal Central Tax Office in Germany)
  • Imports under the IOSS are exempt from import VAT
  • Sellers calculate the VAT due, charge it to the customer at the point of sale, and report and pay the amount to the central office through the IOSS declaration

How the IOSS works

210426 Grafik IOSS2
210426 Grafik IOSS2


Example: Hansen, a manufacturer based in the non-EU country of Norway, sells sweaters to private buyers in the EU. Starting in 2022, Hansen will deliver sweaters from its central warehouse in Oslo to private buyers in Germany (without using an online trading platform). The value of each item is less than €150 (including transport costs).

Hansen registers these imports exclusively in Germany. The company participates in the IOSS in Germany and has registered with the Federal Central Tax Office in Saarlouis. For VAT purposes, the place of supply to private buyers is, in each case, Germany and German VAT is incurred on the sales of goods. This applies regardless of whether the threshold of €10,000 is exceeded. The import of these goods is exempt from import VAT. Hansen collects the VAT due from the customer via the shop’s checkout and the net purchase price. The company reports this VAT in the IOSS. It pays the accrued amount to the Federal Central Tax Office in Germany.

In forthcoming articles in our series, we will explain which taxation procedures apply if the IOSS is not used and what special features arise for sales via marketplaces and electronic interfaces.

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Anita Richter
Anita is a graduated economist and German syndic tax advisor. She started her tax career at KPMG where she spent 5 years in corporate tax advisory and M&A tax projects before moving to Springer Nature Group. During a period of 8 years she was with Springer Nature Group. she headed the global Indirect Tax function and successfully designed and implemented a digital transformation and automation strategy of global indirect tax related processes and business flows.

At eClear AG, Anita is responsible for business development and for innovative tax technology solutions. She is product owner of eClear`s full service solution “ClearVAT”.
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