Notice on the European Union's New Customs Practices

With the notification published on the official website of the European Commission Taxation and Customs Union, some changes in the IOSS system and application will come into force as of July 1, 2021.

It is important that all businesses, especially those that sell online, are prepared for these changes in order to avoid any negativity in the shipping processes.

The changes in the related implementation are stated below:

22 Euro exemption has been removed

With the notification, Value Added Tax (VAT) exemption has been removed for all shipments with a value below 22 EURO arriving in the European Union as of 1 July 2021. As a result of this situation, as of 01 July 2021, all shipments sent to the European Union will be subject to VAT without any price limitation.

IOSS (Import-One-Stop-Shop)

According to the new system, online merchants and marketplaces will be able to make VAT payments through the portal for (B2C) shipments to be sent to consumers whose value is less than 150 Euros, by becoming members of the IOSS portal. The tax rates to be applied to the shipments for which VAT payment is made through the IOSS portal will be determined within the framework of the VAT rate rules of the final destination country of the shipment.

How to become a member of the IOSS Portal?

Every country in the European Union has its own portal. In order for the relevant business to become a member of the IOSS portal, it must apply to the portal with the tax number of the country to which it will be a member. Businesses get an IOSS number with the membership to the portal. Businesses can utilize intermediary firms for the IOSS number.

What are the advantages of IOSS?

The portal makes it easier for people in the European Union to pay VAT for products purchased from outside the Union.
With the tax to be collected during the sale of the product, consumers do not have to make any additional payments regarding the tax.
Since the tax of the product will be paid in advance, customs clearance procedures becomes faster.

In case there is no IOSS number

IOSS membership is not a mandatory application. However, in the case a shipper does not have an IOSS membership, shipments will have to be taxed and will be subject to customs clearance in the country of destination. Due to this, taxation will be more expensive and transactions will take a longer time.

Source: https://ec.europa.eu/taxation_customs/business/vat/ioss_en