The Import One Stop Shop (IOSS) offers a streamlined solution for e-com businesses outside the EU, including those in the UK, to report and remit VAT on goods sold to EU customers. In today’s article, we will explore the various aspects of the IOSS, including the IOSS number example and how to obtain one.
What is an IOSS number?
An IOSS VAT registration number allows e commerce businesses to register in a single EU Member State to declare and pay import VAT across the European Union. This system simplifies VAT accounting by enabling all EU transactions to use a consistent VAT rate.
When you use the IOSS number for shipping, Customs doesn’t collect import VAT at the border. Instead, you will pay the import VAT through a monthly IOSS return, making the process more efficient.
Generally, you can use an IOSS number in the following situations:
- The goods are outside the EU at the time of sale.
- The items are shipped in consignments with an intrinsic value not exceeding €150.
- The goods are not subject to excise duties.
Why did the EU introduce IOSS numbers?
The EU introduced the Import One Stop Shop to combat fraud, level the playing field for retailers, and ensure a fairer VAT collection across the Union.
What does an IOSS VAT number look like?
An IOSS number for shipping is usually strictly limited to a 12-digit alphanumeric code. It begins with the prefix “IM” and is followed by ten additional characters in this format: IM1234567890.
Here is a breakdown for clarity:
- 123 represents the 3-digit ISO numeric code for the member state.
- 456789 is a 6-digit number assigned by that member state.
- 0 is the check digit.
How do I get an IOSS number for shipping?
If you are within the EU, you can obtain an IOSS VAT number by registering directly in your Member State. For those outside the EU, an IOSS number can only be acquired through an EU-established intermediary.
For example, an Irish-based supplier can register for an IOSS ID online via the VAT OSS section in their Revenue Online Service (ROS) account.
In addition, if you leverage online marketplaces like Amazon and eBay, the process is even more straightforward.
The marketplace provider acts as the supplier and takes on the responsibility of handling VAT at the point of sale. When you register with these platforms, they will provide you with their unique IOSS ID.
Once you have a valid IOSS ID, ensure that the value of your e-commerce shipment is below €150 (excluding UK VAT) and provide this number to your freight carrier. It helps customs verify that VAT has already been paid.
For orders exceeding €150 or if you do not have a valid IOSS number, the common alternatives are DDP (Delivered Duty Paid) and DDU (Delivered at Place) shipping.
Do I have to register for an IOSS number?
No, the IOSS scheme is not mandatory.
You can still use DDU or DDP freight, but these options come with significant risks:
With DDP, you may encounter substantial surcharges from your carrier if they need to reverse the VAT back to you, which can impact your profit margins.
With DDU, your carrier will request VAT from your customer upon delivery and might also impose a local handling fee. It can lead to a negative customer experience, potential returns, and unfavorable reviews.
When should I charge EU VAT?
To ensure compliance, you should collect the correct EU VAT based on the country where your buyer is located at the time of checkout. The simplest approach is to apply the VAT rate relevant to the buyer’s country once you have their delivery address. For reference, you can use this comprehensive list of VAT rates by EU country.
Final thoughts
Ensuring proper use of the IOSS number can save time and avoid costly errors for smooth cross-border transactions.
We are here to simplify the process for you. Whether you need help obtaining an IOSS VAT registration number, understanding VAT rates, or managing international shipping, we support you with efficient operations and enhance customer satisfaction.
Furthermore, our expertise in customs clearance and dangerous goods compliance ensures that your shipments are handled efficiently and in line with all regulatory requirements.
