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Today’s the Day: End of the EU VAT de minimis and the launch of the Import One-Stop Shop (IOSS)

Today (July 1) marks the latest major change affecting the complex world of cross-border eCommerce.

It sees the removal of the de minimis value whereby no VAT is paid on goods of a value of up to €22, making all imports subject to European Union VAT rates.

The VAT amount applicable is subject to the local VAT rate of the customer’s delivery country (destination country). The exemption from customs duties on imported goods below €150 will remain in place and will only be applicable on goods with an intrinsic value of more than €150.

To assist third country online retailers and marketplaces, the EU is simultaneously launching the Import One-Stop Shop – or IOSS for short.

The application of the IOSS portal is intended to facilitate a simplified process for the declaration and payment of VAT from either the EU or a non-EU country.

The message is simple – those who are best prepared will be the ones in pole position to secure and grow their cross-border eCommerce sales.

To implement the IOSS, businesses will have to register on the IOSS portal of any EU member state. This electronic portal will hold businesses responsible for charging and collecting VAT, meaning the consumer will be charged VAT at the point of purchase, subject to their local VAT rate.

With this in place, it will enable quicker clearance times at border control, leading to efficiency gains and cost savings for businesses. Just as important, it will ensure high levels of consumer satisfaction, avoiding the issue of any doorstep shocks.

If a business is non-EU based, it will have to appoint an EU-established intermediary to fulfil its VAT obligations of collection, payment and declaration of VAT under IOSS. This intermediary, or VAT agent, will represent them with the IOSS portal and will share the responsibilities of the supplier for return submissions of VAT payments under the IOSS scheme.

Once registered on the IOSS portal, a unique IOSS identification number will be assigned to you. This number will need to be put on all packages under €150 sent to the EU. VAT will then need to be calculated and charged to the customer at the point of purchase with the invoice submitted with the package at customs. IOSS returns must be filed on a monthly basis either directly or through the intermediary and a record kept by the business.

EU goods eligible for relief

As the IOSS is not mandatory, if a business chooses to opt out of registering to the online portal, their cross-border operations may face challenges. Since they are not registered, VAT will not be charged or collected at the point of sale, meaning consumers will have to pay this fee at the point of import.

This may lead to delayed clearance of the consumer’s goods and unexpected fees of import VAT or other handling fees being charged.

Faced with these additional charges, consumers may refuse to pay to have their goods released from customs resulting in an unpleasant and unsatisfactory experience for the consumer and a potential loss to the business. It will also make the consumer less likely to return to the online seller in the future.

The changes to EU VAT are primarily about creating a level playing field and fair competition between EU and non-EU eCommerce players. Major cross-border trading countries such as China, the US and the UK will be among those most impacted by the changes.

Hurricane has been working closely with its customers, including postal operators, carriers, retailers and marketplaces, enabling them to be ready for July 1.

The provision of complete and valid product and shipment data is essential in order to make use of the IOSS and to take advantage of the simplified process that the new portal allows.

But while many businesses have undoubtedly put in place robust processes and systems to meet the new requirements, many others will be playing catch-up over the coming weeks and months as they come to realise the disadvantages of not being prepared.

 

The new cross-border eCommerce reality

Hurricane co-founders Martyn Noble and David Spottiswood teamed up for their latest Postal Hub Podcast with Ian Kerr.

They reflect on the impact to date of major regulatory changes including Brexit and the US STOP Act and look ahead to the likely impact of the EU VAT Package & IOSS coming on July 1.

The posts and carriers which harness the best cross-border data solutions are the ones which will prosper in the world of global eCommerce.

To listen to the podcast, click here: http://www.thepostalhub.com/podcasts/episode-241-cross-border-ecommerce-brexit-ics2-stop-act-hurricane

SEKO selects Hurricane as global cross-border data partner

Two of the fastest growing cross-border eCommerce brands in the world have joined forces to help their customers achieve frictionless trade and manage critical events including the US STOP Act and the launch next month of the EU’s Import One-Stop Shop (IOSS).

SEKO Logistics, the global freight forwarder, 3PL and supply chain management specialist with a growing focus on eCommerce solutions, has selected Hurricane Commerce as its global cross-border data partner.

Hurricane’s technology will be available via SEKO’s Omni-Parcel platform which provides brand owners, retailers and e-tailers with a global eCommerce solution.

The company’s solutions will also be rolled out through SEKO’s Transport Management System (TMS) and Warehouse Management System (WMS) portals.

SEKO has previously been using Hurricane’s solutions for eCommerce customers in Australia and the United States.

David Emerson, Senior Vice-President eCommerce Solutions at SEKO Logistics, said: “We are delighted to have chosen Hurricane as our global partner for the provision of cross-border data. We pride ourselves on only working with the best-in-class and Hurricane’s solutions are truly world-leading in the field of data provision.

“In today’s global eCommerce, nothing moves without the right data.

“Increasing rules and regulations mean that shipments have to have accurate data sets otherwise they are going to run into severe problems.

“For SEKO, it is an imperative that we keep our customers’ goods moving and Hurricane is a key partner in enabling us to achieve this.”

Martyn Noble, CEO of Hurricane Commerce, said: “SEKO sets the standard in cross-border eCommerce logistics and supply chain management and we are delighted to have signed this global partnership agreement.

“The fast-moving regulatory landscape means that complete and valid data is non-negotiable in international eCommerce. Events like Brexit, the US STOP Act and, from July 1, the EU VAT Package and the Import One-Stop Shop (IOSS) are having a massive impact on the requirements to succeed in cross-border eCommerce.”

David Spottiswood, Co-Founder of Hurricane Commerce, said: “Failure to meet the mandatory requirement for high quality data including product descriptions, HS6 codes, 8- and 10- digit import and export codes and country of origin, is resulting in parcels increasingly being stopped by customs.

“This leads to huge additional logistical and cost challenges around returns, warehousing and transportation. But just as important is the long-term damage done to the brand reputation of retailers, marketplaces and their supply chain partners.”

Hurricane’s solutions include Aura, covering the critical cross-border areas of duty and tax calculation, prohibited and restricted goods screening and denied parties screening, and Zephyr, its blisteringly quick data bulk clearance data enhancement tool.

EU VAT changes and the Import One-Stop Shop (IOSS): An opportunity for growth

It is now exactly a month until the EU VAT Package and the Import One-Stop Shop (IOSS) come into effect.

July 1 is the next major milestone for businesses committed to growing their cross-border eCommerce operations.

Events including Brexit and the US STOP Act have already highlighted this year the importance of having the highest quality product and shipment data in order to achieve the smoothest possible delivery and customer experience.

For third country online retailers and marketplaces selling into the EU, the looming EU VAT Package will further intensify this requirement. For global leaders in international eCommerce like China and the UK, these are quite simply the most significant event in their calendar in 2021.

From July 1, the EU will remove the exemption from VAT on low value goods with a value of less than EURO 22.

The EU is also making third country online retailers and marketplaces responsible for the collection and remittance of VAT.

To support retailers and marketplaces, the EU has created the Import One-Stop Shop (IOSS) with the intention of simplifying the declaration and payment of VAT on distance sales with an intrinsic value of less than EURO 150.

These are substantial changes and are intended to level the playing field between EU retailers and marketplaces and their counterparts in other parts of the world, most notably China.

It is also intended to have the same impact on postal operators and express carriers.

Any marketplaces uncertain about whether to opt into the IOSS should note the decision of Amazon to embrace the new system for both its retail activities and marketplace businesses. Several other major marketplaces are believed to be actively moving in the same direction.

Hurricane Commerce has produced a guide to the EU VAT Package and the IOSS to help retailers, marketplaces and their logistics partners to take advantage of the opportunities presented by the new rules.

Hurricane is also one of Royal Mail’s partners in providing support to its customers with the IOSS – https://www.royalmail.com/business/international/guide/delivered-duties-paid

Among the key things you need to know are:

  • The retailer or marketplace (or their chosen intermediary) only needs to register on the IOSS portal of one EU member state. Registration opened on April 1, 2021;
  • IOSS makes the buying process easier for the consumer with VAT being paid at the point of purchase – thereby avoiding doorstep surprises when goods are delivered;
  • If the seller does not use the IOSS, the consumer will have to pay VAT at the point of import – with resulting delays in clearance and delivery and greater likelihood of returns;
  • The use of the IOSS will result in much greater efficiency gains;
  • Electronic customs clearance also requires only the so called Super Reduced Dataset, resulting in faster clearance, shorter transit times and reduced costs.

Online retailers or marketplaces which do not have a presence in the EU will need to appoint an intermediary in at least one EU member state.

The intermediary will be responsible for the declaration and payment of VAT to the tax authorities of the member state on the basis of a monthly IOSS VAT return.

They are also responsible for keeping records that have to be made available electronically upon request.

Of critical importance is the need for the retailer or marketplace to be able to provide complete and valid electronic data for customs clearance.

If using the IOSS, this will mean complying with the requirements of the Super Reduced Dataset, including accurate product descriptions and HS6 codes.

Various attempts to delay the introduction of the IOSS have been firmly rejected – no surprise as we emerge from the pandemic with governments around the world under huge pressure to maximise their tax revenues.

But while preparation is needed to be able to access the IOSS, it should be seen as a big opportunity to secure substantial cross-border eCommerce growth.

By registering and meeting the requirements, particularly around the provision of high-quality product and shipment data, companies will have a significant advantage over their competitors.

This will include faster customs clearance and delivery, greater efficiencies, reduced costs and enhanced customer experience.

To access a copy of Hurricane’s EU VAT and IOSS brochure, email: info@hurricanecommerce.com

https://tamebay.com/2021/06/why-eu-vat-changes-and-ioss-should-be-opportunity-for-growth.html

Video – Hurricane CEO Martyn Noble presents at Tamebay Live conference

Hurricane CEO Martyn Noble recently presented at the first ever Tamebay Live conference.

His 50-minute masterclass looked at ‘How to achieve best-in-class cross-border eCommerce in 2021 and beyond’.

During the session, Martyn explained how different regulations, ranging from Brexit to the Import One-Stop Shop, have changed the requirements for global trade forever.

And he showed how by getting the data right on every product and shipment, retailers, brands and marketplaces can put themselves in the best possible position to successfully scale their eCommerce operations.

Hurricane to be Gold Sponsor at WMX Europe

Hurricane Commerce will be a Gold Sponsor at this year’s World Mail & Express Europe Conference.

The prestigious event will be held virtually on June 16 and 17.

WMX Europe is widely recognised as the foremost international trade event for post and parcel professionals.

This year’s conference comes at a critical time for the sector with major EU VAT changes and the introduction of the Import One-Stop Shop (IOSS) coming into force from July 1.

Postal operators, both receiving and exporting, are busy preparing to capitalise on the opportunities presented by the IOSS, as are many of the biggest marketplaces and online retailers.

The implementation of the IOSS is set to feature prominently in presentations and delegate networking at the event.

So far, over 30 speakers have been confirmed including Hurricane CEO Martyn Noble and co-founder David Spottiswood who will take part in the ‘Optimising Cross-Border’ discussion.

Hurricane will also be a Gold Sponsor at the WMX Asia conference in November.

The events come at an exciting time for Hurricane, which was established four years ago and is increasingly regarded as the data partner of choice for postal operators, carriers, multi-carrier platforms, retailers, brands and marketplaces.

High profile customers include Royal Mail, SEKO, Australia Post, An Post and Lenton Group.

Its cutting-edge technology is also increasingly in demand in China and the wider Asia Pacific region where some of the world’s largest eCommerce players are having to adapt quickly to the onset of the changing global regulatory landscape.

Hurricane’s AI-driven, real-time solutions include Aura, which covers the three key areas of duty and tax calculation, prohibited and restricted goods screening and denied parties screening, and Zephyr, the data enhancement service which ensures product and shipment data is of the quality needed to speed up customs clearance and onward delivery.