There are big changes coming on the 1st of July when selling and shipping to the EU. With new paperwork and regulations to handle, we spoke to Craig Lee, Head of Sales & Marketing at Spring GDS to get some IOSS assistance and advice in plain speaking language to help retailers understand what’s happening.
This is vital reading if you sell to the EU, the paperwork (although everything will be done electronically) and regulations will apply to every EU sale from the 1st of July and it may also impact some sales from late June if they don’t enter the EU before the deadline. Read on to understand what’s happening and if you need IOSS assistance then Spring GDS will be happy to assist:
What’s changing for UK businesses when selling into the EU?
From 1 July 2021, the European Union is changing its VAT rules for e-commerce businesses. This will include a new, simpler structure for paying VAT: the Import One-Stop Shop (IOSS). The Import One-Stop Shop allows non-EU sellers to manage, report and pay all the VAT they’re due within the European Union via one partner: their VAT intermediary.
The new EU VAT rules will also affect online marketplaces, which will become the deemed supplier when they facilitate certain cross-border B2C transactions on behalf of their third-party sellers. This means they’ll be liable to collect, report and remit the VAT due from the consumer.
Finally, the existing VAT exemption for goods valued under €22 that are sold to EU consumers will be ceased. From the 1st of July, all goods sold to customers in the EU, regardless of their value, will be liable to VAT.
What’s IOSS and how do I get one?
The Import One-Stop Shop (IOSS) is the new electronic portal that reports consignments valued up to €150 that are imported into the EU. Non-EU sellers, or deemed supplier marketplaces, now need to apply for an IOSS registration number through an intermediary, who will act as their VAT representative in the European Union. Until the 15th of July, UK e-commerce businesses can make use of a special onboarding offer with a reliable VAT intermediary via Spring UK. Contact email@example.com to learn more.
How do you collect the marketplace IOSS?
As mentioned before, the EU has also decided to change the role that marketplaces play in e-commerce transactions. From the 1st of July, online marketplaces (OMP) will become what is called a ‘deemed supplier’. This means they’ll be responsible to charge and collect VAT from their customers for orders with a value below €150. Under the new EU VAT rules, marketplaces should provide their IOSS number to their sellers, who can then add this number into the data that accompanies their shipment for IOSS clearance into the European Union.
Shipments valued above €150 do not fall under the responsibility of the marketplace.
What to do with my sales with a value above €150?
IOSS only allows the registration and filing of B2C shipments with a value below €150. This means that shipments of a higher value, even just incidental ones, can’t be shipped via IOSS.
Consignments with a total value above €150 can be shipped under DDU (Delivery Duty Unpaid), which means that the local delivery party will need to charge VAT and Duty at the recipient’s door. As this will involve a local administration fee (€5 – €10 on average) and longer transit times (the shipment will be held until the charges have been paid), this can result in discontented customers.
At Spring, we realise that the DDU solution isn’t ideal for UK businesses nor their customers. That’s why we’ve developed an end-to-end solution that helps UK businesses ship to the EU after the 1st of July without complications for them or their customers. This solution is called Spring Clear.
With Spring Clear’s free cost calculator, your customers can see and pay the VAT and Duty charges they’re due in their check-out basket, eliminating any unwanted surprises. By avoiding the regular DDU shipments, Spring Clear can provide a solution that allows for transparent pricing, fast delivery times and satisfied customers. Contact firstname.lastname@example.org to find out how you can get on board.
What happens before the 1st of July – can I use my IOSS then?
Goods that are ordered, sent and delivered before the 1st of July will be unaffected by the changes. IOSS can only be used on sales made after the 1st of July. Goods that are shipped before July 1st but arrive at the country of destination after this date will be liable for VAT and the local administration fee, which will need to be collected upon delivery. Make sure to inform your customers about this during the checkout process to avoid a bad customer experience.
What about Duty?
Duty is only applicable if the value of your shipment exceeds €150. It’s based on the type of goods you ship and the regulations in the country of destination. The international classification system of Harmonised System (HS) codes is used to calculate Duty. Duty is exempt if you can prove that the goods are of preferential UK or EU origin.
The Spring Clear landed cost calculator automatically calculates the Duty and VAT due on goods sold to EU consumers, helping you avoid the additional cost of developing your own solution.
How can Spring help?
At Spring, we want to help UK businesses avoid the risk of customer upset and promote a hassle-free delivery of your sales into the EU from day one of the new VAT rules.
We offer a variety of reliable, fast, cost-effective and sustainable solutions for your shipments to Europe with a value below and above €150.
Contact email@example.com to learn more about Spring Clear and other global delivery solutions.
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