If you work in eCommerce, and you sell to Europeans, you might have heard about the new EU VAT rules 2021, that will come into force on the 1st July 2021.
The new rules have been developed to tackle the tax avoidance from eCommerce, that import products from abroad one at a time, and do not pay the relevant duties upon the entrance of the items on European soil.
It sounds really scary we know, but don’t worry Yakkyofy got you covered! Continue to read this step-by-step guide to understand what is changing and what you need to do to continue selling with Yakkyofy without problems.
What is the difference between OSS and IOSS?
The new EU VAT rules 2021 differentiates between One-Stop-Shop (OSS) and IOSS (Import-One-Stop-Shop).
What is OSS and how it works
The Union One-Stop Shop (OSS) “is the electronic portal businesses can use to comply with their VAT obligations on e-commerce sales within the EU to consumers from 1 July 2021.
The Union OSS is an electronic portal that simplifies up to 95% of VAT obligations for online sellers and electronic interfaces throughout the EU, as it allows them to:
- Register for VAT electronically in a single Member State for all intra-EU distance sales of goods and for business-to-consumer supplies of services;
- Declare and pay VAT due on all supplies of goods and services in a single electronic quarterly return;
- Work with the tax administration of their own Member State and in their own language, even if their sales are cross-border.”
What is IOSS and how it works
IOSS (Import-One-Stop-Shop), “according to the VAT rules applicable up until 1 July 2021, no import VAT has to be paid for commercial goods of a value up to EUR 22.
The new VAT e-commerce rules will abolish this provision as of 1 July 2021. Thus, from 1 July 2021, all commercial goods imported into the EU from a third country or third territory will be subject to VAT irrespective of their value.
The IOSS facilitates the collection, declaration, and payment of VAT for sellers that are making distance sales of imported goods to buyers in the EU. The IOSS also makes the process easier for the buyer, who is only charged at the time of purchase, and therefore does not face any surprise fees when the goods are delivered. If the seller is not registered in the IOSS, the buyer has to pay the VAT and usually a customs clearance fee charged by the transporter.”
What are the major changes?
Importing Products to the EU (EUR 22 or less)
Up until the 1st July 2021, products that have a declared value that is equal, or below, EUR 22, are not subject to EU import VAT. This will change under the new IOSS rules, and each and every product entering the European market will be required to pay VAT.
N.B.: VAT payments are only applied to purchases made by buyers residing in the European Union, for items that cost less than EUR 150.
The New VAT Rules
The EU will introduce a new import scheme that will regulate products (up to a value of EUR 150) imported from third country countries.
With this new scheme, the VAT will be due to be paid at the Point of Sale (POS), rather than when it crosses the EU customs border.
N.B.: You will have to start collecting VAT when you make sales through your eCommerce store, at the checkout.
Timeline of the changes
We have summarized in the table below the changes that will be introduced with the new legislation:
|EU VAT POSITION|
|Before 30/06/2021||After 01/07/2021|
|EU Suppliers to EU customers||VAT depends on several factors, registration in multiple countries might be required.||Only one EU VAT registration needed, can fill OSS returns easily.|
|Third Party Countries Suppliers to European Customers||According to the VAT rules applicable up until 1 July 2021, no import VAT has to be paid for commercial goods of a value up to EUR 22.||VAT collected at POS, rate depends on the destination country.
EU VAT Registration needed, together with submission of a third party country OSS return.
New EU VAT rules 2021: Yakkyofy got you covered
We know the above might sound overwhelming, but don’t worry, because as always, Yakkyofy has got your back! So let’s see together how it works if you choose to dropship with us!
First things first, we will start to apply the new regulations on all the parcels paid on our system from the 24th of June, because, also if the new regulations of lOSS will start from 1st July, you need to consider the shipping time from China to the EU. So it is highly probable that all the parcels paid from the 24th will arrive in the EU after the 1st of July.
Secondly, different rules will apply if you sell your products via an independent store platform or if you open a merchant account on marketplaces such as eBay or Amazon.
Last but not least, these new regulations will impact only parcels to the EU, if you sell in the US, CA, NZ, AU, or Asia, nothing will change.
Selling through a Marketplace (eBay, Amazon, etc)
If you use Yakkyofy to sell items through an online marketplace such as eBay and Amazon, there will be no changes in the product prices you pay to us.
This is because it is the marketplace itself that will handle the VAT collection from buyers located in the European Union and will provide us with their public IOSS that will pass over to forwarders.
Independent Online Store Platform (Shopify, Woocommerce, etc..)
If you sell with Yakkyofy on your own store built on a platform, such as CommerceHQ, Shopify, WooCommerce, or Storeden, you can have 2 options:
You have an IOSS number
If you already registered to the IOSS platform and you have a registration number you can upload it in the settings area inside your Yakkyofy Dashboard, in this way we will be able to pass it to the freight forwarder that will deliver your parcels in the EU without applying any additional cost.
In this way, you are managing the VAT internally in your store so you can set up the correct rates for each country, 17% for Luxembourg and 22% for Italy.
You don’t have an IOSS number
If you still do not have an IOSS identification number, you still can deliver products to the EU with Special Line but you will need to pay an additional fee to the freight forwarders.
This means that from the 24th of June if you do not send us your IOSS number, you will see an additional cost added to the product price of all orders inside of Yakkyofy directed to any EU country.
Remember that you must add the correct VAT values inside your store settings, to cover the correct charge for each country as you see below, they go from 17% charged by Luxemburg up to 27% applied in Hungary:
- Austria 20%
- Belgium 21%
- Bulgaria 20%
- Croatia 25%
- Cyprus 19%
- Czech Republic 21%
- Denmark 25%
- Estonia 20%
- Finland 24%
- France 20%
- Germany 19%
- Greece 24%
- Hungary 27%
- Ireland 23%
- Italy 22%
- Lituania 21%
- Lettonia 21%
- Luxemburg 17%
- Malta 18%
- Netherlands 21%
- Poland 23%
- Portugal 23%
- Romania 19%
- Slovakia 20%
- Slovenia 22%
- Spain 21%
- Sweden 25%
What changes for items shipped in bulk?
The above rules only apply to drop shipping orders, where you ship items one by one, in one parcel. On the other hand, if you import products in bulk, nothing will change for you.
All you need to do is just request a quotation to Yakkyofy and we will provide you a quote inclusive of all costs (shipping, customs, etc.).