IOSS & OSS

IOSS and OSS are two crucial systems in the realm of international trade,
particularly concerning the European Union (EU) and its member states.

What's the Difference Between IOSS and OSS?

New European Union e-commerce regulations have completely transformed VAT compliance for online sellers. The two most important changes are new mechanisms to manage VAT compliance for online sales. Specifically, the One Stop Shop (OSS) and Import…

KEY FEATURES

What is OSS?

The OSS is a new mechanism to manage VAT on cross-border sales of goods and services throughout the EU. 

To appreciate the value of the union OSS, it is important to understand the previous VAT regulations governing cross-border selling. 

Complex cross-border bureaucracy

For example, consider an e-commerce business based in France that sells goods to customers throughout Europe.

A single digital VAT return

The VAT OSS greatly simplifies the VAT compliance process. Under the VAT OSS, you can manage the VAT on cross-border supplies of goods and services throughout the EU with a single VAT registration. 

Complying with the OSS

There can be little doubt that the OSS simplifies VAT compliance. However, the new tax authority system introduces some complexities of its own.

What is the OSS VAT rate?

The OSS is an excellent way to consolidate VAT compliance on pan-EU customer sales. However, sellers are still obliged to charge VAT at the local rate of the country in which their EU consumers are based. 

What is IOSS?

So, what is IOSS? The IOSS fulfills many of the same functions of the OSS scheme, but with a few crucial differences.

The most important distinction is that the IOSS applies to imported goods. The OSS, by contrast, applies to goods that are already within the EU at the point of sale.

In addition, the IOSS only applies to goods that are worth no more than €150.

Goods that are subject to excise duties are not eligible for the IOSS.

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Benefits of the IOSS

Broadly speaking, the IOSS offers similar benefits to the OSS scheme: you can account for the VAT on your sales throughout the EU with a single VAT return. 

This is much simpler and more cost-effective than registering for VAT in multiple countries and complying with the local filing regulations. 

The IOSS also offers a number of benefits to importers. 

Under the IOSS, you charge VAT to the customer at the point of sale. You, therefore, are no longer obliged to manage import VAT at the border. 

In addition, authorities have undertaken to fastrack import procedures for goods shipped using correct IOSS procedures.  

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