Step-by-Step Guide to IOSS Number Registration for EU-Bound Goods

 It is not easy to navigate selling within the EU’s Import One-Stop Shop, or IOSS, especially for those businesses new to the European Union. The IOSS system gives both businesses and consumers certain benefits. This step-by-step guide will take you through the process of IOSS registration, provide some background on IOSS, and illustrate the benefits and requirements of this system.

What is IOSS, and Why is it important for EU-bound goods?

What is IOSS?

The Import One-Stop Shop (IOSS) is an electronic portal created by the European Union in July 2021. Its purpose is to simplify VAT compliance for non-EU sellers dispatching goods worth EUR 150 or less directly to EU consumers. By using IOSS, sellers can charge VAT at the point of sale rather than have customers face unexpected fees at delivery.

Why register for an IOSS number?

The IOSS number registration will allow the sellers who don’t sell from the EU to ease VAT, save time on delivery, and have a higher rate of customer satisfaction. With an IOSS number, businesses remit VAT directly to the EU, which speeds up customs processing and provides customers with upfront costs at checkout.

Who needs an IOSS number?

Do I need an IOSS Number? If you’re a business shipping low-value goods (up to €150) directly to customers in EU countries, an IOSS number can be essential. Even third-party online platforms such as eBay or Amazon may need to consider IOSS if they enable non-EU sellers to reach EU customers.

Step-by-Step Guide to IOSS Number Registration

Step 1: Be Eligible

IOSS number registration is essentially for a non-EU business that will sell to consumers who are EU-based. However, businesses based in the EU can also be registered for IOSS where they import from outside of the EU and want to simplify VAT payments.

• Eligibility for Non-EU Business: A business not based within the EU who sells directly to the consumers of the EU.
• Eligible EU Business: An EU business which imports goods from a third country.
• Sales Threshold: Business which trades in low-value items, not exceeding the sum of EUR 150.

Step 2: Choose the State of Registration

Non-EU businesses need to choose an EU country where they intend to register for IOSS. This chosen country shall be the ‘Member State of Identification’ for VAT compliance for the business.

Tip: Choose the country having a good and effective VAT system and support. For example, Ireland is highly preferred among the non-EU businesses since it follows a straightforward process.

Step 3: Select an EU Intermediary

For non-EU businesses, you will need to employ an intermediary that is registered within the EU to enable registration under IOSS. An intermediary will pay VAT on your behalf, submit returns, and make the necessary payments.

• Selecting an Intermediary: You can choose intermediaries that have experience with cross-border VAT compliance as well as knowledge of specific IOSS rules.
• Charges by intermediaries: The different intermediaries charge differently; therefore, the options are compared for a most cost-effective partner.

Step 4: Submit Required Documentation

Having already determined the country in which to register your company and identified an intermediary, you can now forward the necessary documentation. These can include:

• Registration evidence of a business: This could be a certificate of incorporation or business licence.
• Intermediary Agreement: A signed document the intermediary will agree with you.
• Identification Proofs: Such evidence includes business tax ID or address verification.

Step 5: Apply for your IOSS Number

With the documents in place, your intermediary will guide you on how to file your IOSS registration form in the Member State of Identification where you have chosen to identify yourself. Here is what you normally need to fill on the form:

• Business Details: Name, address, contact details, and VAT ID.
• Intermediate Information: The VAT registration number and contact details of the intermediary.
• Scope of Business: The nature of the goods shipped average volume.

What happens after registration?

Receiving your IOSS Number

After the application is processed, you will receive your unique IOSS number. This number is essential for compliance; include it on every VAT return and invoice to customers.

Use of the IOSS Number

With the IOSS number, you are in a position to add VAT to the sale for products to be delivered in the EU. There will be no VAT when products are delivered since it was already included when you sold them to customers, thereby greatly enhancing their satisfaction.

How are returns and payments for IOSS works?

To file an IOSS, you should make a VAT return normally falling on the last day of the month succeeding the tax period. Below is a short guideline for IOSS returns:

• Monthly VAT Return: The intermediary or business submits a return detailing sales volume, goods values, and collected VAT for each EU country.
• VAT Payment: VAT collected from customers must be remitted to the Member State of Identification.
• Record Keeping: Maintain a record of sales and VAT returns for at least ten years, as required by EU VAT authorities.

Benefits of using IOSS for your business

Simplified VAT Compliance: IOSS consolidates VAT reporting into a single system that is located in the EU, hence saving time and effort

Transparent Costs for Customers: IOSS ensures the full cost is reflected by the customer during checkout, with VAT included in the charges. This aspect reduces the abandonment of carts when hidden charges appear at the checkout stages.

Faster Customs Processing: The IOSS number on shipment clears faster customs processing and therefore the VAT has been already paid; such shipment experiences a reduction of up to 50% delivery speeds.

Reduced Return Rates: The provision of clear pricing in VAT will minimise the rates of returns since no client expects extra delivery fees during shipment.

Common Pitfalls and How to Avoid Them

Missing Registration Deadlines: One may miss registration deadlines. This results in VAT fines and delayed deliveries. Make sure you apply a long time before making any sales that are EU-bound.

Selection of Wrong Member State: The VAT processing time can be very slow in the selected country, which means delayed delivery. Choose the VAT-friendly Member States of Ireland or the Netherlands.

Incomplete Documentation: Inaccurate documentation is one cause of registration delay. Therefore, all documents submitted have to be accurate, such as intermediary agreements and identification proofs.

Ignoring Monthly Reporting Requirements: Filing for VAT returns monthly can attract a lesser penalty. Use an organised system, maybe with a reminder, to track deadlines.

Conclusion:

The IOSS is very beneficial to businesses shipping low-value goods into the EU. The registration of the IOSS number allows for an improvement in VAT compliance while, at the same time, permitting customer satisfaction as well as expedited delivery. However, this requires planning, reliability with an intermediary, as well as precise monthly reports

Disclaimer:

This blog is for information purposes only and should not be relied or acted upon when making financial decisions. Always seek professional advise prior to taking any action.