Significant changes in Import One Stop Shop
Background on Import One Stop Shop (IOSS)
Basically, IOSS is a system, through which value added tax (VAT) for import distance sales within the EU can be declared and paid electronically. Subsequently, the obligation to register in the country of destination no longer necessary for suppliers from third countries.
Goods with a value of up to 150 Euro can be imported duty-free to the EU with IOSS, as long as the VAT is correctly declared and paid. At EU level, improved tax compliance was expected through implementing this system, since it removes bureaucratic hurdles. However, this was not successful since the implementation.
Adopted changes
I) Mandatory use of IOSS
Therefore, significant changes were made with the ViDA package: As of 1 July 2028, online retailers are obliged to use IOSS. If the import distance sales are not transacted through an electronic interface or IOSS is not used, then the supplier automatically becomes liable for the import VAT in the respective EU country of destination.
Previously, it was possible to pass on all import procedures as well as the associated obligations to the buyer, but this will no longer be possible with the new regulation. This leads to a registration obligation in the country of destination if IOSS is not used. Retailers from third countries with which no comprehensive exchange of information agreement exists, are obliged to appoint a tax representative as the debtor of import VAT. Alternatively, it is possible with the approval of the acquirer that they pay the import VAT. Otherwise, the goods will not be authorised for free circulation within the EU.
II) Fictitious delivery from online platforms
Online platforms (market places) also will be included in the liability in the future. They classify from 1 July 2028 regularly as (fictitious) supplier and therefore as debtor of import VAT. Passing it to the buyer is no longer possible. Therefore, market places should use the IOSS – otherwise, the import should be processed through the standard procedure, connected with registration or representation duties in the country of destination.
Consequences for online retailers
The reform brings a significant improvement for the online retailers within the EU by reducing the competitive advantage of not complying with tax regulations. Retailers from third countries that are not explicitly selling via electronic platforms, have to register – either through the uncomplicated IOSS system or through the more bureaucratically demanding assessment procedures in the respective country of destination. Otherwise, their packages may not be released by customs and delivered to the end customer.
Outlook
It remains to be seen whether or to what extent the currently debated abolition of the customs duty exemption threshold at EU level will affect the usage of the new One Stop Shop regulations. We will keep you informed in any case.
Author: Nicole Kruckenfellner, Paul Lobner
