Import One Stop Shop (IOSS) and Postal Delivered Duties Paid (PDDP)

Our international services that take care of VAT and customs duties prior to delivery

Import One Stop Shop (IOSS) and Postal Delivered Duties Paid (PDDP)

Our international services that take care of VAT and customs duties prior to delivery

Were you prepared for the EU’s VAT e-commerce changes? They came into effect on 1 July 2021.

As of 1 July 2021, items imported to the EU with a value of €22 or less became no longer exempt from VAT. We have three options available to help you manage these changes – depending on the size and nature of your business.

The EU's Import One Stop Shop (IOSS) can help you start, or continue, trading from GB into the EU.  You can either register, via an intermediary, and file your own tax returns, or we can assist you to do so, via the new IOSS Registration and Filing Service detailed below – offered by Deloitte.  If you register yourself, all you need do is to input your IOSS number into the correct field, where requested, on the Royal Mail shipping platform you use. If you need help calculating tax then our partner, Hurricane’s Aura service can do that in your checkout.

If you don't want to register yourself, we also have Taxamo Assure, an innovative pay-as-you-go solution which is perfect if you simply want to concentrate on selling.  It does the heavy lifting for you. All you need to do is to pay a fee per parcel – and Taxamo Assure will do the rest including calculating tax within your checkout. See below for further details.

Whichever IOSS solution you choose, Royal Mail can take your items and ensure they get delivered across the EU without delay. Just provide your IOSS number and full customs data in the pre-advice you send us.
 

What happens if I don’t act?

Your item will be handled ‘Delivered Duties Unpaid’ (DDU).  The recipient may have to pay import VAT (and customs duties, if payable) and a handling fee in the receiving country. These charges will depend on the country you are sending to, the value and nature of the item (e.g. commercial goods or gift). 

Where this has not been communicated to the customer during the sales process, and they are not expecting additional VAT and duties (or the handling fee) this may lead to delays or returns.
 

What should I do?

In response to the 1 July 2021 changes, if you are a business who sells to customers in the EU, you have several options to consider.

1. Selling through a marketplace

If you sell through a marketplace, they are likely to have registered for IOSS. If so, you just need to assign their IOSS number along with all the normal customs data in the pre-advice to us for the items sold through that marketplace.

Marketplace sellers who sell via eBay, Etsy and NotOnTheHighStreet can continue to visit their local Post Office in the normal way.  Those customers should declare which of these marketplaces their items were sold on, when presenting them at the Post Office counter, and the Post Office branch will capture this information. The correct marketplace IOSS number will then be allocated to your item by Royal Mail. If you are selling goods on other marketplace places you can use the Royal Mail Click & Drop service – where you will find instructions how to do this.

2. The Import One Stop Shop (IOSS)

You can register yourself, via an intermediary, and file your own EU VAT returns. Or, if you prefer to concentrate on selling, you may want to consider our ‘assisted’ IOSS solutions with our partners Deloitte and Taxamo. Whichever approach you choose it allows you to calculate and collect VAT from your customer at the checkout and pay it directly to the EU.  You just need to assign the right IOSS registration number to each item in the pre-advice (along with all the normal customs data) you give to us. If you don’t use Taxamo Assure and you need help calculating tax then our partner, Hurricane’s Aura service can do that in your checkout. See below for further details.

3. Postal Delivery Duties Paid (PDDP)

PDDP is available to a limited, but growing, list of EU destinations.  If IOSS isn't for you, or you are sending items above €150 or items of any value to businesses, Postal DDP may be the answer. It allows you to calculate and collect VAT and, if applicable, customs duties from your customer at the checkout and pay it to the EU tax authorities via Royal Mail.  If you need help calculating VAT and customs duties then our partner, Hurricane’s Aura service can do that in your checkout.

So, what’s best for you?

Here are the different options at a glance to help you to decide what suits your business best.

Options for sending from GB to the EU from 1 July 2021

Options Delivered Duties Unpaid (DDU) IOSS - Sender Self-Registration IOSS - Selling via a Marketplace Postal Delivered Duties Paid (PDDP) Assisted IOSS Solutions
  UK sellers do not ask their customer for tax and duty. EU recipient is contacted in country and pays VAT owed before receiving item UK seller registers for VAT themselves, via an intermediary, collects VAT and completes monthly tax returns UK seller sells through an IOSS registered marketplace, so the marketplace take on the responsibility for collecting and paying VAT on B2C items with the value of €150 or below Allows UK sellers to collect and pay tax and duty on goods that would otherwise be paid by the customer before delivery UK seller uses trusted partners to a) provide support in registering and completing tax returns, or b) completely take care of EU VAT compliance instead of the seller, to simplify the process for collecting and paying VAT on B2C items with value up to €150
Process involved No action needed

Integrate a landed cost calculator (e.g. AURA from Hurricane)

Register for IOSS, via an EU intermediary, in one EU country to get an IOSS number

Provide IOSS number and customs data to RM in pre-advice

Account for VAT and complete monthly returns

Register to sell with a marketplace

Place your goods on their website

They take care of VAT obligations (for B2C items up to €150)

Integrate a landed cost calculator (e.g. AURA from Hurricane)

Request that RM’s Postal DDP product codes (MPR for Tracked and/or DE6 for Untracked) are added to your RM account.

Collect VAT (and duties if applicable) on from your EU customer in checkout and RM will invoice you for it, at a later date, along with a handling fee.

The EU customer receives their product without interruption before delivery

Pay a fee to a third party to:

Support you in registering and filing tax returns for IOSS for a fee/subscription OR…

Take care of VAT at point of sale and pay VAT obligations under the partner’s IOSS number

Why do this?

Simple option that requires no change

Can help you to keep costs appear low at checkout

Saves on third party costs and often uses in-house tax expertise or resources

Marketplace takes care of VAT (for B2C items up to €150) and IOSS number

Can simplify logistics

Offers broader market access

Useful if you have sales of goods over €150 or sales of any value to businesses

Maintains your customer experience

Simplifies the process of filing and registering for VAT/IOSS and ensures calculations are correct

Option for a ‘pay as you go’ solution to be ‘hands free’ of VAT

Peace of mind if wanting to register yourself for IOSS and file for VAT

Challenges?

Unexpected costs for your EU recipient (VAT and handling fee)

Customers can refuse to pay and item is returned

Interrupted customer experience

Specialist understanding and time is required to manage returns (handling enquiries with tax authorities, choosing where to register and file, deciding on an intermediary)

Risk of issues when completing returns

Reliance on the marketplace

Fees are taken from each sale (10% plus)

Reduced control and brand recognition

Doesn’t cover items over €150 or items of any value sold to businesses

Need to increase prices to cover the cost of VAT

Can be non-cost effective for low value parcels 

Can be difficult to obtain a VAT refund when goods are returned

Requirement to complete VAT returns yourself (the returns would not be done for you but checked), unless ‘pay-as-you-go’ solution is used

Higher cost of business if choosing a ‘pay as you go’ per parcel option (but no requirement for tax return filing)

Royal Mail Postal Delivered Duties Paid (PDDP) service

As an alternative to DDU and IOSS, we have developed a Postal Delivered Duties Paid (PDDP) service. This is operational now to Germany, The Netherlands, Cyprus & Malta for Tracked & Untracked services. Tracked is available to France with Untracked from 19 July. Other destinations will be added as they become ready. 

For items valued over €150, and for sales with any value to business customers, IOSS cannot be used so PDDP is a solution that has a lower handling fee than DDU. It can also be used for items with value up to €150 if IOSS is not suitable for you.

The service will allow the UK merchant to calculate and collect from their customer at the checkout an additional amount that will cover the cost of import VAT and customs duty alongside the PDDP handling fee. This will help to avoid unexpected charges and delivery delays to the end recipient, improving the overall customer experience.  If you need help calculating tax then our partner, Hurricane’s Aura service can do that in your checkout.

We are also at an advanced stage of deployment planning for commercial solutions for PDDP too and will be contacting existing customers in due course.
 

What is the EU’s Import One Stop Shop (IOSS)?

The EU’s Import One Stop Shop (IOSS) is a VAT registration scheme your business can use from 1 July 2021 to comply with the EU’s new VAT e-commerce rules on sales from GB to the EU.  

If dispatching goods from Northern Ireland to EU you can use the One Stop Shop (OSS). HMRC’s OSS guidance can be found here. The HMRC OSS registration portal can be found here.

The new rules could impact how you do business in the EU. You can find more information about these changes here, that the European Commission has published and here is further guidance provided by the UK Government on these changes.

Once registered for IOSS in only one EU country, VAT can be collected at your online checkout and paid on all B2C sales of goods with value up to €150 into the EU by submitting a single monthly EU VAT return. By using IOSS, the vast majority of our delivery partners will not charge import VAT or a handling fee. This will help to avoid unexpected charges and delivery delays to the end recipient, improving the overall customer experience.
 

Should you register for IOSS?

If you don’t already have a solution in place, you can continue to post with Royal Mail but your customers may have to pay import VAT and a handling fee in the receiving country before they can receive their parcel from our delivery partner, no matter how small the value of the goods is. Whatever the case, it could lead to delays, returns and a poor delivery experience for you and your customers. Some customers might refuse delivery, rather than pay the import VAT and the handling fee.

For sales you make through your own checkout you can register for IOSS yourself. There are several ways you can access IOSS. The most appropriate solution for your business will depend on your circumstances (e.g. size, scale and maturity of your business). Royal Mail has also developed two solutions for sales you make through your own checkout that may suit your business.

The EU's Import One Stop Shop (IOSS) can help you start or continue trading from GB into the EU. You can register and file your own tax returns or we can assist you to do so. If you don't want to register yourself, we have Taxamo Assure - an innovative pay-as-you-go solution. See below for further details.

What are Royal Mail’s IOSS solutions?

You have a range of IOSS options with Royal Mail. You can register and file your own EU VAT returns. All you need do is to input your IOSS number into the correct field, when requested, on the Royal Mail shipping platform you use. 

Or you might want to consider our ‘assisted’ solutions from Deloitte or Taxamo.
 

Our assisted IOSS options

Taxamo Assure

A simple 'pay-as-you-go' option where Taxamo acts as the ’electronic interface’ for you - allowing you to use its IOSS number to send parcels to consumers located in the EU. For sales where Taxamo is the electronic interface, there is no need for you to register for IOSS and file tax returns. This solution will allow you to comply with the new rules and ensure a smooth delivery experience for your customers. Once you have integrated the technology into your checkout, it does everything for you including automatically calculating the landed cost for you – so you know what to charge at the checkout.

Find out more and register here
 

The IOSS Registration and Filing Service offered by Deloitte

You can sign up for Deloitte’s IOSS Registration and Filing service, which will provide you with your IOSS number and enable you to send parcels with the VAT paid to recipients across the EU. This option is recommended for businesses sending higher volumes of parcels to consumers in the EU, who do not wish to register and manage tax returns in-house.

Find out more and register here

Assisted IOSS Solutions – Deloitte and Taxamo

  Taxamo - Assure Deloitte - Registration & Filing Service
What does it involve?

This is a hassle-free ‘pay as you go’ option where Taxamo acts as the deemed reseller

You use Taxamo’s IOSS number to send items to your customers in the EU

You pay a £2 per item which means you don’t have to register or file for EU tax (Taxamo does all that for you)

You pay Deloitte to register you for IOSS, so you can send items using your own IOSS number

Using sales and tax data from your system Deloitte will prepare and file the VAT returns for you

You pay one off fee for registration (£300), plus annual fee (£2000) for tax returns

Why would you choose it?

This is a great hassle-free solution for smaller senders of under 3000 parcels a year to the EU

To avoid the VAT management overhead - calculation, registration, filing and remittance

To transfer the VAT liability risk - penalties and late fees - to third party

Streamlined customer journey with seamless VAT compliance integration from checkout to delivery

You want to send higher volumes of EU items (3000+ a year) with a reduced cost per item and lower perceived tax risk

You are prepared to install or already have tax IT systems needed to calculate the VAT on sales to different EU countries

You can dedicate operational resource to managing the tax

It may not be right if?

You are sending a high volume of items (at a certain volume it’s likely to become cheaper to register and manage your own returns)

You already have the ‘in-house’ capability and expertise to register and file for IOSS independently

You only sell to the EU through marketplace(s)

You only send a small number of items each year

You already have the capability and expertise to register and file for IOSS independently

You only sell to the EU through marketplace(s)

Calculate the landed cost of your goods with Aura from Hurricane

If you register yourself for IOSS, or register via Deloitte’s IOSS Registration and Filing service, you will need to calculate the landed costs of your goods. You can do this by using Aura from Hurricane. This service calculates all import Duty and Tax chargeable at the checkout. It also provides a Prohibited & Restricted Goods check, Denied Parties check & HS code look-up all in one API call.

Find out more here

If you would like to progress please ask your Account Manager for access to the Landed Cost API (Aura) and they can raise a request with the Royal Mail API team.
 

Frequently asked questions about IOSS

The chances are that you will have questions about the changes taking place in relation to EU VAT on 1 July and the options open to you. Take a look at the Frequently asked Questions and their answers to help you find the right solution for you and your business.
 

Please note: In accordance with Government guidance, if you are dispatching goods from Northern Ireland to the EU, IOSS cannot be used to declare and pay VAT on your EU sales. Instead, you can make use of the One Stop Shop (‘OSS’) which is another EU VAT scheme that allows you to declare and pay VAT on all sales into the EU by submitting a single quarterly EU VAT return. Alternatively, you can register for and pay VAT in each member state you are selling goods to. If your overall annual sales from NI to the EU doesn’t exceed £8,818 (€10,000), you can continue to charge UK VAT to your EU customers. HMRC’s OSS guidance can be found here. The HMRC OSS registration portal can be found here.

More information

  • Full and accurate electronic customs data is required for IOSS and PDDP
  • Items without full and accurate data will be sent / delivered as DDU
  • For IOSS and PDDP the existing international prohibitions and restrictions apply. Aura, from Hurricane can help you identify these in your checkout.
  • Important: For PDDP no food products can be accepted
  • IOSS cannot be used for excise (tobacco and alcohol) products
  • IOSS is available with the Non-Personal correspondence products (parcel and large letter formats)
  • PDDP is available with dedicated product codes MPR for Tracked and DE6 for Untracked
V1.3 30/06/21
Service
Business Account Business Account Consumer Online Business Account Consumer Online Postage
  Parcel Large Letter Parcel Parcel

Untracked
country sort

DE4
INTL Business-NPC-Untracked-PKT

DG4
INTL Business-NPC-Untracked-LLTR

OLA

ISOLP

Untracked
pre-sort
(Max Sort Replacement)

DW1 
INTL Standard Sort 2

n/a

n/a

n/a

Tracked & Signed

MTE
INTL Business-NPC-TrkSgn-PKT

MTG
INTL Business-NPC-TrkSgn-LLTR

OTC

ITSOLP

with extra comp

MTF
Intl Bus Pcl Track&Sign Xtr Cmp Ctry

n/a

n/a

n/a

Tracked

MP7
INTL Business-NPC-Trk-PKT

MTK
INTL Business-NPC-Trk-LLTR

OTA

ITROLP

with extra comp

MP8
Intl Bus Parcels Tracked Extra Comp

n/a

n/a

n/a

Signed

MP9
INTL Business-NPC-Sgn-PKT

MTO (oscar)
INTL Business-NPC-Sgn-LLTR

OSA

ISIOLP

with extra comp

MP0 (zero)
Intl Bus Parcels Signed Extra Comp

n/a

n/a

n/a

 
 
Administrative requirements

  • Our IOSS and PDDP service can only be used when full and accurate customs information is provided such as when an approved shipping solution is used
  • These platforms capture and generate customs data files plus automatically create the required labels to send items abroad
  • Royal Mail has shipping platforms such as Click & Drop and Pro Shipping or you can integrate your own system with API Shipping (Other competitor shipping systems also available)
  • No segregation required 
  • You can send items of Large Letter and Parcel Format dimensions (see format specifications below). These will all be processed and charged as a single piece Parcel,  irrespective of format.

What are the ‘Parcels’ Dimensions?

A Parcel is anything that is not a Large Letter
The length plus the width plus the height must not exceed 900mm and no single dimension may exceed 600mm

For tubular or rolled packages:

The length plus twice the diameter must not exceed 1040mm but must be at least 170mm
The greatest single dimension must not exceed 900mm but must be at least 100mm
No parcel can be heavier than 2kg
 

What are the ‘Large Letters’ Dimensions?

A Large Letter (formally known as Flats) is considered as anything that is:

Over the size of 140mm x 90mm
Under the size of 381mm x 305mm
No more than 20mm thick
Less than 500g in weight.
 

 
Our IOSS and PDDP services can only be used when fully compliant customs data is supplied. 

With our IOSS service, you calculate and charge your customer at the point of sale the VAT payable at the destinations VAT rate.  Aura provided by Hurricane is a landed cost calculator that can be used to do the calculation in your checkout. The same is true for PDDP although in addition you will need to calculate and collect Customs Duty on items valued €150 or more.  

As well as providing electronic data you will need to complete a customs declaration form (CN22 or CN23) for items of non-personal correspondence/goods sent abroad which must be attached to the outside of your item.

The declaration must include a description of the contents and their value. It must also show they are commercial items (i.e. Sale of goods).

For PDDP Businesses will need an Economic Operator Registration and Identification number (EORI) to trade with EU countries (if a business has traded with non-EU countries, it already should have a GB EORI number). To register for an EORI number visit https://www.gov.uk/eori for more information.

Due to the changes in trading rules with the EU, we recommend that you understand EU VAT rates which you can find here under Quick links (downloadable in excel or pdf format) and potential duty rates.

  • For IOSS it is recommended that you attach a signed commercial invoice to the outside of the item’s packaging
  • For PDDP you MUST attach a signed commercial invoice to the outside of the item’s packaging
     

 
IOSS will be available to all EU destinations bar Romania.  Romania have not published a go-live date yet.

PDDP is dependent on the overseas delivery Post or partner being ready to accept and process. This is operational now to Germany, The Netherlands, Cyprus & Malta for Tracked & Untracked services. Tracked is available to France now with Untracked from 19 July. More destinations will be added in due course.

Please note: For Portugal any item valued over €150.00 (i.e. PDDP or DDU (as IOSS is only for items valued up to €150.00) the recipient’s 9-digit (numeric only) tax ID number must be provided in order for the item to be delivered without delay. In Portugal this is known as the Número de Identificação Fiscal (NIF) - for individual people and the Número de Identificação de Pessoa Coletiva (NIPC) – for companies.

 
For IOSS there will not be any charges for you.  In the Czech Republic a small handling fee may be charged to the recipient.

For PDDP there will be a 50p per item handling fee payable to Royal Mail alongside the VAT and duty we charge back to you.

 
For further information about sending parcels please see our International Business Non-Personal and Personal Correspondence User Guidepdf, 5.55 MB.

 
Returned Items process

If your IOSS item cannot be delivered or the recipient returns the item, it will be returned to you.   You will be able to reverse the VAT payment on your next VAT return.

If your DDP item cannot be delivered or the recipient returns the item to the seller, it will be returned tracked right back to your local delivery office.

Applying to HMRC for a refund of the UK import VAT (and customs duty, if any) incurred on re-importation will be the responsibility of the Sender and if foreign import VAT / customs duty have been incurred on the items when entering the EU, the seller or the Recipient will have to apply to the foreign customs authorities for a refund of those charges. Royal Mail will not be responsible for these.

  • For IOSS and PDDP the price for shipping will be charged in accordance with our standard Royal Mail International service
  • For IOSS there are no further charges. 
  • For PDDP any taxes and customs duties (where relevant) plus any handing fee will be collected on a separate summary invoice once customs has been cleared
  • For PDDP all taxes, customs duties and handling fees will be passed on to our customers when Royal Mail are charged them from the overseas post/parcel operator
  • For PDDP your Royal Mail invoice will show a summary level review of any charges. If you want further detail a line level view can be accessed via our E-Invoicing portal 
  • For PDDP Tax is at the rate set in the destination country, eg. 21% in Belgium