What Non-EU countries need to know about IOSS & OSS

Sovos
January 18, 2023

The EU VAT E-Commerce package has been in place since 1 July 2021. This applies to intra-EU B2C supplies of goods and imports of low value goods. Three schemes make up the package. These are based on the value of goods and the location of the sale of goods.

All OSS schemes are currently optional. The schemes mean taxpayers can register in a single EU Member State and account for the VAT due in other Member States.

For companies outside of the EU, the package schemes that apply are:

  • Non-Union One Stop Shop (Non-Union OSS) – non-EU businesses can account for VAT on all supplies of B2C services where EU VAT is due.
  • Union One Stop Shop (Non-Union OSS) – non-EU businesses can account for VAT on all Intra-EU supplies of B2C goods that are located in the EU.
  • Import One Stop Shop (IOSS) for low value goods delivered from outside the EU, where the intrinsic value of the goods is no more than €150.

Want to understand how OSS and IOSS work? Keep reading!

Have IOSS specific questions? Our tax experts answer common questions in our IOSS guide.

How to ship to Europe

Exporting products to the EU is challenging. Couriers often have a bewildering number of services. Prices differ from service to service.

There’s no easy way to find fast, cost-effective shipping services, but here are tips to help:

  1. Look for couriers that have information about IOSS and OSS on their websites already
  2. Familiarise yourself with customs forms for the country of import
  3. Ask your courier how they support the schemes and can support your business
  4. Confirm if your carrier can act as an indirect customs representative if you do not have an EU establishment

Does my company need a VAT number?

Businesses with a certain turnover must register for VAT. This varies from country to country. For example, the UK’s VAT threshold is £85,000 for established businesses. If you are interested in a business solution, please get in touch with our sales team.

How do I get a VAT number?

Registering for VAT takes time. Each Member State has its own process for obtaining a VAT number. VAT compliance differs from Member State to Member State.

For non-EU companies, appointing a Fiscal Representative might be necessary. A Fiscal Representative acts on behalf of companies in a local VAT jurisdiction, managing VAT reporting and other requirements. For IOSS, most non-EU businesses will need an IOSS intermediary.

We know registering for VAT is difficult and involves understanding place of supply rules, fiscal representation and many other elements.

The EU VAT E-Commerce package enables taxpayers to register in one Member State to account for VAT in all Member States.

Benefits of applying for a VAT number as a non-EU business

In most cases, a VAT number will be mandatory because of your business’ activity; in some cases, it will be voluntary. There are many benefits to applying for a VAT number.

These include preventing financial penalties and receiving EU VAT refunds. EU VAT refunds depend on certain circumstances, such as on VAT exempt items.

How to register for OSS

The OSS scheme is currently optional. Before registering businesses should consider the benefits and impact on their supply chain.

When a supplier obtains either an the Member State that grants the VAT number becomes known as the Member State of Identification.

Registering for OSS in the UK

As the UK is no longer part of the EU, registering for OSS as a UK business means using the Non-Union OSS, Union OSS or IOSS schemes. There is no need to have a normal VAT registration in the EU to apply for IOSS or a non-Union OSS VAT registration, however, a local EU registration is required before obtaining the OSS registration.

The first step is to understand if an needs appointing. The intermediary, usually an agent or broker, submits the IOSS returns on behalf of the company.

The UK business will need to choose the Member State it wants to register with for the non-Union OSS scheme.

If the UK business has warehouses in the EU, then the company will still need local in each Member State with a warehouse, but they can choose one Member State for OSS registration.

The Northern Ireland Protocol adds even more complexity to cross-border trade. Stop browsing the internet for unhelpful answers; contact our experts for advice instead.

Our team of experts can help you understand OSS and IOSS further. Don’t hesitate to get in touch today, especially about the Northern Ireland Protocol’s effect on trade.

 

FAQ for non-EU countries

What is VAT number called in USA?

The USA doesn’t have VAT. The equivalent is Sales Tax, with its own permit and tax ID.

DO US companies have a VAT number?

If a US company wants to sell goods into Europe it can register for a VAT number with the relevant Member State tax authority. The business’ supply chain will determine if / where a VAT registration is required.

Do US companies have to pay UK VAT?

This depends on the product or service and whether the US company has activity in the UK that requires it to become VAT registered such as selling low value goods or importing in its own name into the UK.

How much is international shipping to Europe?

The cost of international shipping to Europe varies, depending on where you send goods from and how quick delivery is.

How much does it cost to ship from USA to Europe?

Costs for shipping from the USA to Europe vary, depending on if they are express or standard shipping times. Different couriers charge different prices too.

What is the cheapest way to ship a package from USA to Europe?

This depends on package size, insurance and delivery speed.

How long is shipping from EU to US?

Shipping from the EU to the US can take anywhere from four days to four weeks, depending on customs and import requirements.

 

You want to sell and trade within the EU with ease?

Speak to our experts. They will navigate you through the complexities of the EU VAT landscape.

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Author

Sovos

Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe, and is owned by Hg and TA Associates.
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