E-commerce 2021 and the iOSS return: Frequently Asked Questions
As of 1 July 2021, much will change for businesses operating in the e-commerce sector. We have written at length about these changes. One of the changes concerns the import One Stop Shop (‘iOSS’).
The iOSS is a system by means of which the import of goods into the EU is, under certain conditions, exempt from import VAT, and the VAT due on the sale of these goods to consumers within the whole EU (distance sales) can subsequently be reported in one single return. More information on the iOSS can be found here.
In this article, we will answer a number of frequently asked questions about the iOSS, and how it will work in practice.
Q: How will the iOSS return need to be filed, once the system is up and running?
A: The iOSS return must be filed by means of a special portal. In this portal, you can report all distance sales for each member state, and pay the VAT due. A point of attention is that the VAT due in each member state may differ, which means that you must apply the correct VAT rate. As it may prove difficult to get your customers to pay extra VAT after the sale, we strongly recommend that you implement the correct VAT rates in your systems.
Q: Is the use of the iOSS mandatory?
A: No, you are not obliged to make use of the iOSS. For example, in specific situations it is also possible to use an Article 23 license to neutralise the Dutch import VAT due, and to subsequently report your distance sales in the regular One Stop Shop return. This could apply in cases where your goods are imported into the Netherlands in large batches, or if the value of your shipments varies significantly (both over and under the € 150 threshold). Should you wish not to use the iOSS, this is of course possible. In that case, please bear in mind that you may be faced with VAT obligations in each individual EU country, especially if the shipping agent does not make use of the special scheme for postal operators and couriers. This may lead to an increase of the administrative burden and significant expenses.
Q: Can I make partial use of the iOSS?
A: No, you cannot. If you choose to use the iOSS, you must report all distance sales to the EU in the iOSS return. It is therefore not possible to report distance sales to EU countries A, B and C by means of the iOSS, but to report distance sales concerning EU country X in a local VAT return.
Q: If local tax authorities have questions about my iOSS return, or initiate an investigation, is this centralised and coordinated by the Dutch tax authorities?
A: The tax authorities of member states may query or investigate individually. It is therefore important that you pay the correct amount of VAT, on time. The incoming payment will be allocated, by the member state of identification, to the member states concerned. An underpayment may therefore lead to intervention by multiple tax authorities.
Q: What are the rules for correcting or supplementing an iOSS return?
A: If an incorrect iOSS return has been filed, you must correct this return. In principle, this correction should be reported in the next iOSS return. However, member states are required to permit corrections within a three year period (after the filing deadline of the period in which the mistake was made). The iOSS return includes a special column for such corrections.
If you have any questions about the iOSS, or if you would like to discuss what would be the best approach for your business, please feel free to contact Marisa Hut or Barthold Bergman. They would be happy to help you.