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Importing low value goods: Why I suddenly have to care about VAT

Do you know that if you import low value goods into the EU, you need to start thinking carefully about VAT compliance. But why? Let’s start with the short answer.

From 1 July, all commercial goods imported into the EU will be subject to VAT. And that’s really the central point. There are no more exemptions on low value items, so goods will be subject to VAT even if they are valued at under €22.

If you want, you can stop reading now and contact a VAT compliance expert to work out how to ensure your business remains VAT compliant. 

A more efficient way to import low value goods

Here’s a more comprehensive answer. The EU has scrapped the VAT exemption on imported low value goods. At the same time, officials have introduced the Import One Stop Shop (IOSS), a new system that greatly simplifies the VAT compliance procedures for imported consignments valued under €150. 

As the name implies, the IOSS is a one-stop solution for managing VAT. Here’s a brief overview of how it works. Rather than registering for VAT in each EU country to which you sell goods, the IOSS lets you perform one IOSS registration, through which you can file a single return accounting for all your sales. 

Significantly, the IOSS also promises to expedite the import process itself. Goods that are shipped using the IOSS must be accompanied by an IOSS number, which should see them moved through customs without delays. 

Thirdly, when using the IOSS, VAT must be charged at the point of sale. That’s more efficient from a VAT collection point of view. It’s also more convenient for customers, who will not face additional unexpected charges when they take possession of the goods.  

What are my VAT compliance options?

The IOSS is not obligatory. If you import low value goods, you can still account for VAT the old fashioned way (multiple VAT registrations, etc.).

However, considering the simplicity, efficiency and improved customer experience, most eligible e-commerce sellers are likely to adopt the new mechanism. Moreover, the IOSS makes it simpler to ensure you remain compliant, thus avoiding penalties.

Get in touch with a Vatglobal consultant for clarity on how to register for the IOSS, and how to optimise your VAT compliance as VAT regulations evolve. 

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