With 01st July 2021 fast approaching, the introduction of Import One Stop Shop is not that far away. Some EU member states have now opened up for registrations and already some GB based taxpayers are coming up against some unexpected complications.
Import One Stop Shop (IOSS)
This is an EU wide scheme; the aim is to simplify the movement of goods under the value of €150 to consumers (B2C). Without IOSS, non-EU sellers who ship goods into the EU will see the consumer incur import VAT which the consumer must pay to receive their goods.
To improve the customer, the seller can register for IOSS and the seller charges VAT to the EU consumer, using the EU consumers local VAT rate. The goods are then shipped clearly showing that VAT has been charged and the goods are delivered with nothing else for the consumer to pay. The seller submits an IOSS return and pays over the various VAT amounts they have collected from their EU customers at point of sale.
An EU based business can register for IOSS with their local authority. However, for non-EU based businesses, such as GB traders, the assumption has always been to register for IOSS in Republic of Ireland, mainly because of the use of the English language.
The Republic of Ireland recently published its IOSS guidance here and the surprise is that a non-EU business cannot directly register for IOSS, registration can only take place via an intermediary.
“If a non-EU established supplier wishes to register for the IOSS, they can only do so directly if they are established in a country that the EU has a VAT mutual assistance agreement in place with and the goods are supplied from that country to the EU. In those cases, the supplier can register directly in the Member State of their choosing.
In all other cases, a non-EU established supplier must register for the IOSS indirectly through the appointment of an intermediary. The registration of the supplier will be done through the intermediary they have appointed to represent them, and the Member State of registration will be the Member State where the intermediary has established their business.”
The wording suggests that there are two conditions for directly registering for IOSS. The first is that there is a VAT mutual assistance agreement in place and secondly that the goods are originating from GB.
The reference to VAT Mutual Assistance agreement is unclear. The EU law does not require a fiscal representative or intermediary for companies not established in the EU but where there is a mutual assistance agreement in place.
The EU/UK Trade Agreement does include a tax and VAT mutual assistance agreement, but experience so far indicates confusion between EU member states on their application.
Some Countries like France have accepted there is mutual agreement and fiscal representatives are not required, but Portugal has stated the opposite, not recognising the mutual agreement, other EU member states are still to decide.
Ireland and Intermediaries
The Republic of Ireland are saying they do not recognise the mutual assistance agreement, at this stage, and so an intermediary is required.
An intermediary is an agent, usually an Accountant appointed to register and file your VAT/IOSS returns. A GB trader may have thought they could register for IOSS themselves but seemingly that is not the case, and the trader will need to engage with a local (Irish) Accountant to register and submit the IOSS returns.
The trader could consider setting up a legal entity in Ireland, or could attempt to register in France depending on language skills, or maybe engage a French Accountant to do the registration but leave the filing of returns to you. Otherwise, there was inevitably a cost to registering for IOSS as even without the intermediary requirement, it would be wise to seek professional assistance to ensure registration and returns are submitted correctly.
Whilst the uncertainty on legal interpretation will resolve itself in time, if you are a business contemplating using IOSS, then please do not wait until July. The window for applications is now open and the time is now to start this journey.
Interestingly, HMRC have stated that they aim to open registrations for One Stop Shop (OSS) in regard to Northern Ireland based traders who are of course seen as being still within the EU for certain VAT purposes – of nothing else, this suggests there is a mutual assistance agreement in place, even if some member states don’t agree.
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