The goal of the directive is to ensure better compliance with VAT rules on imports of goods by shifting the liability to pay VAT on imports of goods to the supplier. Affected entrepreneurs can use the Import-One-Stop-Shop (IOSS) simplification to declare and pay VAT in order to avoid the required VAT registrations in the countries of destination.
IOSS - Single registration for imports of goods
The IOSS procedure is a special VAT simplification for entrepreneurs that carry out distance sales of goods imported from third/non-EU countries with a value of no more than 150 €. The procedure also includes entrepreneurs providing an electronic interface that they use to support the supply of goods imported from third countries with a value of no more than 150 €. These entrepreneurs are therefore treated as if they had supplied the goods themselves. The special procedure allows transactions within the EU to be declared and pay the VAT due to a central competent tax authority in the Member State concerned (e. g. in Germany: Federal Central Tax Office) instead of having to register for VAT in each EU Member State and maintain the registrations.
Entrepreneurs participating in the IOSS procedure are not required to pay import VAT on imported goods with a material value of no more than 150 € (exemption). The prerequisite is that the individual identification number of the supplier or the representative acting on his behalf of importers from third countries is indicated in the customs declaration. In these cases, the IOSS procedure is not the collection procedure for import VAT but (only) for VAT on local supplies in the Member State of destination. If IOSS is not used, a special collection form is applied (so-called “Special Regime”). Under the Special Regime, import VAT is levied (no exemption), owed by the end customer (“DDU” or “DAP”) and collected and paid by the postal or courier service upon receipt by the end consumer.
In future – from 1 July 2028
The key change to the directive is that third-country suppliers (e.g., online retailers) and fictitious suppliers (e.g., sales platforms) will in future be liable for import VAT and VAT on distance sales of goods imported into the Member State of destination. This generally entails an obligation to register for VAT in the respective EU member state. The registration requirement does not apply if IOSS is used. In this respect, the use of IOSS for third-country suppliers with a corresponding flow of goods is likely to be virtually unavoidable as a less costly and less administratively burdensome way of dealing with VAT in the EU. The fact that, under the IOSS, registration in one EU member state allows all of the potentially numerous VAT compliance obligations in all member states to be fulfilled significantly increases the attractiveness of the IOSS. However, it may be necessary to engage a domestic representative in the respective EU member state. At the same time, there is hope that this will be a more effective way of countering VAT losses in third-country-based e-commerce in the interests of a level playing field. The special regime will no longer apply in future.
Further steps
The current draft directive amending the VAT Directive (2006/112/EC) requires formal unanimous approval by the Council of the EU to amend Article 201 and 201a of the VAT Directive. Twenty days after the adoption of the final version in the Official Journal of the EU, the directive will enter into force and apply from 1 July 2028.