Starting from July 1, 2021, the European Union (EU) will apply new VAT rules for all goods selling to European countries, you can read the change applies on the image below.

Would Museigen Hobby Register The IOSS?

For us, Museigen Hobby as a small business, we decided NOT to register the IOSS, at least this year (2021) we’ll not make any change on our checkout process to charge any VAT from our European customers.

As a result, if you’re living in Europe, all of your purchases in Museigen Hobby will be subject to VAT charged by your country, plus the customs clearance fee charged by the transporter.

What Is An IOSS And What Is It For?

The Import One-Stop-Shop (IOSS) is the electronic portal business designed for online businesses outside of the EU to comply with the EU VAT on imported goods.

The IOSS allows online business sellers who selling goods to buyers in the EU to declare and pay the VAT to the tax authorities, instead of making the buyer pay the VAT at the moment the goods are imported into the EU as it was previously the case (for products over 22 EUR).

You can read more detail by visiting the Import One Stop Shop (IOSS) Page

What Are The Advantages Of The IOSS?

The IOSS facilitates the collection, declaration, and payment of VAT for sellers that are making distance sales of imported goods to buyers in the EU.

Based on what we understand, IOSS is designed for the global online business sellers to collect, declare, and making payments of VAT for the buyer who purchase goods outside of the EU.

Therefore, online sellers need to charge the VAT (based on the buyer’s country of EU) during the checkout process. And therefore, the buyers would only get charged VAT at the time of purchase and do not need to face any surprise fees when the goods are delivered.

If the seller is not registered in the IOSS, the buyer has to pay the VAT and usually a customs clearance fee charged by the transporter.

Why Change The Rule?

These new rules will:

• Ensure that VAT is paid where consumption of goods and services takes place;
• Create a uniform and transparent VAT regime for cross-border supplies of goods and services;
• Re-establish fair competition between European and foreign e-commerce market players, as well as between e-commerce and traditional shops.

What Will Happens Since July 1, 2021, And Does It Affects You?

Here are the answers I get directly from the official EU Consumer…

The answer is yes and no:

• ‘YES’, because you are positively affected as an EU citizen. Under the new system, benefits range from less tax fraud, more public revenue being raised as fair taxation becomes the new norm and making trade more competitive. EU environmental and health standards is also safeguarded. So, choose to buy from VAT compliant sellers or marketplaces/platforms, as the VAT you pay will serve to build roads, hospitals, schools and will help the COVID-19 recovery efforts.
• However, the answer is also ’NO’, because you do not have to do anything directly and you are not obliged to change your shopping habits or where you buy from. But you should be aware the new VAT e-commerce rules are meant to bring transparency, simplify procedures and ensure fair taxation for all providers. That is because previously, non-EU businesses could avoid paying VAT and did not have VAT obligations in the EU – meaning their prices were lower. As a result, EU businesses were disadvantaged.

  Due to lack of transparency, you, as the consumer, were sometimes faced with surprise costs or charges to be paid at customs on imported goods. Since 1 July 2021 though, the price you pay can be the final price, with no further calls at importation for VAT or other charges. This is only when you buy goods from a seller or an electronic interface registered in the IOSS.

  If they do not register in the IOSS, you will have to pay the VAT and possibly other postal/carrier charges when goods are imported.

  !!!NOTE: The VAT and possible other postal/courier charges will also have to be paid for goods ordered before 1 July but imported/delivered on or after this date. We recommend EU consumers take this into account when ordering goods from outside the EU and seek more information from the postal operators regarding these additional charges!!!

You can read more detail by visiting the EU Consumer Page.

Some Exceptions Apply

Online sellers do not need to charge VAT on sales of goods in the following circumstances:

• You sell several goods to the same buyer, and these goods are shipped in a package amounting to more than EUR 150. These goods will be taxed at importation in the EU Member State;
• Your distance sales of goods are facilitated by an electronic interface such as a marketplace or platforms. In this situation, the electronic interface is responsible for the VAT due.

Conclusion

With the effects of the new VAT rules starting from July 1, 2021, as an EU buyer, you must be aware that no matter how much the value of the goods is, there’ll be a charge of VAT, processing, and import fee when the goods hit the EU customs.

You’ll need to clear the payments prior to receiving the goods from the customs office.

If there are any questions or concerns, simply email us at [email protected] and we’ll do our best to help you out.

Have a great day!!