The following is a summary of the most important regulations
‘Third country’ refers to any country outside the European Union, such as Switzerland, the UK, Norway, China, USA or Canada.
- The €22 exemption limit for imports will no longer apply. Any goods imported into the Member States of the European Union will therefore be subject to VAT from July 1, 2021. An exemption limit or allowance does not apply
- In any case, there is an obligation to submit a customs declaration. Exemptions from the customs declaration do not apply
- A new (optional) Import One-Stop Shop (IOSS) has been introduced for distance sales of goods imported from a third-country or territory (excluding goods subject to excise tax) with a real value up to €150
About the IOSS
- Participation in the IOSS is a matter of choice and is not mandatory
- This is limited to imports with a real value up to €150
- Participation in the IOSS is only possible uniformly for all EU Member States and all distance sales
- The IOSS enables sellers or agents acting on their behalf to import goods covered by this special scheme into the EU with a VAT return statement to a tax authority in one single EU Member State, e.g. the Federal Central Tax Office in Germany, and to make the resulting VAT payments for all EU countries to this central authority
- Registration for the IOSS has been open since April 1, 2021
- The IOSS tax return statement must be filed on a monthly basis
- Imports under the auspices of the IOSS are exempt from import VAT. The seller is required to calculate the amount of VAT due and charge it to the customer in his shops’ checkout and report and pay this amount to the central office in the IOSS declaration
How the IOSS works
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 for this purpose 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 amount of VAT due from the customer via the shop’s checkout along with the net purchase price. The company reports this VAT in the IOSS and pays the accrued amount to the Federal Central Tax Office in Germany.
We will explain in future articles in our series which taxation procedures apply if the IOSS is not used and what special features arise for sales via marketplaces and electronic interfaces.