The “Import One Stop Shop” (IOSS) is an optional, simplified scheme that enables an importer of goods in the European Union to register and pay import VAT vide a monthly IOSS return in any one (and not each) member state of the EU in which they transact, subject to the goods being located outside the EU at the time of sale and the intrinsic value of each of these individual consignments of goods do not exceed 150 Euros.
Following the British exit (Brexit) from the European Union, Northern Ireland is treated as part of the EU from the perspective of VAT on goods, and not Services.
Effective March 2024, UK’s ‘His Majesty’s Revenue and Customs’ (HMRC) has launched its portal for the EU IOSS to facilitate UK/ Non-EU businesses with a UK VAT registration number selling goods to customers in the EU/ Northern Ireland on consignments with value not above 135 GBP. The consignments must not be excisable goods. The rate of VAT would depend upon the EU member country in which the customer is based. Online marketplaces selling such low-value goods would be liable to report and pay the VAT due.
Hitherto (since 2021), the IOSS mechanism was available only in the 27 EU member states. In case an existing EU member state registrant wishes to register with the HMRC, it would need to cancel the existing EU member state IOSS registration.
It is pertinent to note that transactions between GB (the rest of the UK including the Isle of Man) and point-of-sale consumers in Northern Ireland should be excluded from the above IOSS returns; instead, these transactions would be part of the UK VAT returns.
The HMRC has issued detailed guidelines on the process of registration, following which, a 12-digit IOSS VAT identification number would be allocated to the registrant. From the date of allocation of the above number, the registrant would need to charge the applicable rate of VAT in the EU (destination) country at the point of sale, maintain appropriate records, submit a monthly IOSS VAT return along with a single payment to HMRC on all low-value goods (135 GBP) imported into EU/ Northern Ireland.
From the perspective of the businesses, this initiative by the HMRC is a welcome one, given that many of the businesses faced challenges setting up the IOSS through the EU Member States mainly owing to the need to have a local representative.
