The VAT Import One Stop Shop (IOSS) procedure is a specific solution for e-commerce businesses and distance sellers of products imported from third countries. It pertains to the delivery of goods directly to consumers in the European Union in consignments valued at no more than 150 EUR. Importantly, goods under this procedure cannot be subject to excise duties. Utilizing this solution significantly simplifies the settlement of value-added tax, as the seller does not need to register for VAT purposes in each EU country where the goods are sold. This procedure is designed for companies that have their business establishment or fixed establishment in the European Union, as well as entities without such locations within its territory. In the latter case, the taxpayer must appoint a fiscal representative, who will represent them in the chosen Member State of identification. Additionally, not only goods suppliers but also electronic interface operators can register for VAT IOSS.
VAT OSS and VAT IOSS
VAT OSS and VAT IOSS procedures differ in the scope of transactions and their maximum value. The first one applies to the sale of goods and services to customers within the European Union. It is used by entrepreneurs engaged in intra-Community distance sales of goods and providing TBE (telecommunications, broadcasting, and electronic) services after exceeding the annual sales limit of €10,000 (PLN 42 000). This limit is fixed, independent of exchange rate fluctuations, and applies to the total sales of goods and services to all EU countries. Within VAT OSS, there are two schemes, the Union scheme and the non-Union scheme, which vary in the taxpayer’s place of establishment and the subject of sale (goods/services).
In contrast, the VAT IOSS procedure pertains exclusively to the importation of goods and their distance sale to customers in the European Union. Unlike VAT OSS, where there is no maximum permissible value for shipped goods, in the VAT IOSS procedure, the value of imported goods in a single consignment cannot exceed 150 EUR. Goods of higher value require standard settlement, which involves paying the due tax at the time of customs clearance. Additionally, declarations under the Union and non-Union VAT-OSS scheme are submitted quarterly, while the VAT IOSS returns require monthly submissions.
Registration for VAT IOSS
The unit responsible for handling VAT IOSS taxpayers is the Second Tax Office of Warszawa-Śródmieście. Registration for this procedure is done electronically via the e-Declarations system available on the Tax Portal website. In order to complete it, it is necessary to submit the VII-R registration form and authorize it with a qualified signature. Additionally, for entities outside the EU represented by a fiscal representative, powers of attorney such as UPL-1 and PPS-1 must be sent to the tax office, along with the appropriate stamp duty. The UPL-1 form, however, does not need to be resubmitted if it was already submitted during VAT registration in Poland. Other required documents include the original of VAT registration confirmation from the taxpayer’s country of establishment, an extract from the commercial register, or another document proving company’s representation, as well as an agreement between the taxpayer and the fiscal representative. Registration is effective as of the day when the taxpayer or their intermediary is assigned an individual VAT identification number for the special import procedure.
Settlements under VAT IOSS
Enterprises that settle VAT under the Import One Stop Shop procedure are obliged to collect tax from buyers of goods. According to Article 138f of the VAT Act, the tax obligation for the distance selling of imported goods covered by the special import procedure arises at the moment of delivery, which is considered to occur at the time of payment acceptance as defined in Article 61b of Regulation 282/2011. Under this procedure, the VAT rate applicable is that of the EU consumer’s country. In the case of registration for VAT IOSS in Poland, the entity submits VII-DO declarations for monthly periods through the e-Declarations system to the Head of the Second Tax Office of Warszawa-Śródmieście by the end of the month following each consecutive month, even if it falls on Saturday or a public holiday. When no distance sales transactions occurred during a given period, a nil VII-DO declaration must be submitted. It is important to note that if modifications to the reported data are necessary, the taxpayer has the right to make corrections in the declaration for the current settlement period. Corrections must be made no later than 3 years from the deadline for submitting the original declaration and include the country of consumption, the tax amount, and the settlement period during which the changes occurred.
Exchange rates
In the VAT IOSS procedure, amounts are declared exclusively in EUR. If the currency of the Member State of consumption is not EUR, it is necessary to convert the transaction value into EUR using the exchange rate provided by the European Central Bank on the last day of the settlement period. If the exchange rate is not published on that day, the conversion should be made using the exchange rate from the following day.
Tax payments in VAT IOSS
After submitting each VII-DO declaration, the taxpayer will receive an email at the address provided during VAT IOSS registration, containing a unique reference number (URN). To ensure correct tax payment, the taxpayer is required to include this number in the transfer title to the tax office. Failure to provide the URN will result in the inability to forward the payment to the other Member States of consumption. Consequently, the tax amount will be refunded to the taxpayer, which may lead to the creation of arrears that will have to be settled directly with the particular countries.
Unlike the declaration submission deadline, the final day for making the VAT IOSS payment is the last working day of the month following the given settlement period. The payment amount is not subject to rounding, therefore, the taxpayer is required to pay the tax amount down to the penny.
In cases when the entity is registered for more than one special procedure (e.g., both VAT OSS and VAT IOSS), separate VAT payments must be made due to the assignment of the tax amounts to specific declarations.
VAT-IOSS and record-keeping obligation
Registration for VAT IOSS entails the obligation to maintain a detailed record of transactions covered by this procedure. The taxpayer or their representative is required to make the record available upon request from the Member State of identification or the Member State of consumption. The data is transmitted electronically, unless technical problems prevent this. In such cases, the relevant tax authority determines the method and timing for making the records available.
The VAT IOSS record must include, among other things:
- the identification of the member state of consumption where the goods are delivered,
- a description and quantity of the goods subject to delivery, as well as the date of delivery,
- the taxable amount along with the applicable VAT rate and the amount of tax due,
- the date and amount of received payments,
- order or transaction numbers,
- information used to determine the place where the dispatch or transport of goods to the buyer began and ended, including unique shipment numbers.
The taxpayer or their representative is required to retain the records for a period of 10 years from the end of the tax year in which the transactions occurred.
Summary
The VAT IOSS procedure is a significant facilitation for entrepreneurs selling goods imported to the European Union, enabling simplified VAT settlements without the need for registration in every member country. It allows companies to minimize formalities, costs and avoid unnecessary complications.
At Nexia Advicero, we offer comprehensive assistance with registration and settlements within VAT IOSS procedure, ensuring full support and security.
We encourage you to contact our experienced advisors for further assistance.
