How does IOSS affect ecommerce?

December 16, 2022

The new IOSS system introduced by the EU was created to simplify VAT reporting for online distance sellers, along with the removal of the EU's low value shipping allowance of €22.

The new changes to the VAT rules have leveled the online playing field for all sellers, as well as preventing fraudulent returns that attempt to evade the tax.

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How the IOSS will affect ecommerce

The Import One Stop Shop (IOSS) is the new way ecommerce businesses will have to collect, declare and pay VAT and other taxes due when importing low-value goods (not exceeding €150) into any EU member state.

By registering with the IOSS, this system will replace the current obligation to register in all countries where goods are sold in the EU.

IOSS also makes the process easier for buyers, as they will be able to see the total cost (including VAT and taxes) at the time of purchase, meaning they will not have to pay additional costs.

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What happens if I do not register my company with IOSS?

In the event that the seller does not register with IOSS, the buyer will be responsible for paying VAT and customs clearance fees. This second invoice is not well received by customers, who will simply decide to complain or stop buying from them. Presumably, customers will start to prefer online stores that can handle VAT and taxes themselves, as the process will be more convenient and transparent for the consumer.

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How to get a tax representative in the EU?

To register with IOSS and sell products to your customers in the EU, you need to register your e-commerce with a taxable person in one of the EU member states.

In case your company is not based in the EU, you will need to find a fiscal intermediary such as Crossborderit to handle the tax, VAT and monthly reporting of goods entering the EU.

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Crossborderit has it covered for you. With simple onboarding and flat, simple shipping rates, it will be a breeze to calculate duties, collect them, even pay them for you. Plus CBIT offers simple DDP for these solutions for an excellent hassle-free customer experience.

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Simply sign up and let Crossborderit take care of the rest.

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Damon Baca

Co-Founder

Crossborderit (CBIT)