Challenges to EU OSS and IOSS regime

The new requirements to charge sales VAT on EU imported sales to consumers not exceeding €150 has brought some major advantages to online sellers and marketplaces. Not least of which is the simplification of import VAT payments for sellers and customer experience.

But sellers registering for the new Import One-Stop Shop returns need to be cautious on several issues:

• Sellers have lost the €22 import VAT exemption on any sales to EU consumers since July 1, 2021. They must charge EU VAT in the checkout (see next point). Or they can rely on their postal service to take care of the sales VAT – but this is not cheap in low volumes.

• Any sellers, including post-Brexit UK merchants, must now charge VAT at the checkout if they expect the consignment value not to exceed €150.

• Sellers must then register for IOSS in their home country (if EU-resident) or any EU state if they are from outside of the EU. For non-EU sellers, this will likely require the appointment of an Intermediary, a type of Fiscal Representative. This will come with expense, especially if the intermediary jointly and severally liable for the sellers VAT.

• For UK sellers and Northern Ireland, there is still confusion and delays on registering for the EU OSS for these sales. The rules remain confusing.

• Non-EU sellers are not able to take advantage of the EU-seller €10,000 threshold for the new rules on goods, services and digital services. If a seller is below this threshold for all their sales across the EU, then they may charge their local VAT instead.