EU VAT | Royal Mail

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

Major changes with regards to the EU Value Added Tax (VAT) came into effect on 1 July 2021. The changes have changed how businesses sell goods to customers located in the EU. The EU’s Import One Stop Shop (IOSS) can help you start or continue trading from GB into the EU. If you haven’t already registered for IOSS, we have three options to help you manage these changes.

As of 1 July 2021, items imported to the EU with a value of €22 or less became no longer exempt from VAT. This means that all goods sent directly from GB to consumers in the EU, both via online marketplaces and sales made directly, are now subject to the local rate of VAT in your customer’s country.

Before 1 July 2021

Less than €22

  • No VAT
  • No customs clearance

More than €22, up to €150

  • VAT
  • Formal clearance
  • Customs clearance fee

More than €150

  • VAT
  • Customs duties
  • Formal clearance
  • Customs clearance fee

As of 1 July 2021

NEW – Up to €150

  • VAT
  • Formal clearance
  • Customs clearance fee

More than €150

  • VAT
  • Customs duties
  • Formal clearance
  • Customs clearance fee

How can I register for IOSS?

You can either register and file your own tax returns, or if you don’t want to register for IOSS there are a number of third party options widely available to assist you. If you register yourself, all you need to do is input your IOSS number into the correct field, where requested, on the Royal Mail shipping platform you use.

What happens if I don’t act?

If you don’t yet have a solution in place, your items will be delivered by Delivery Duties Unpaid (DDU). Subsequently, 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. Whatever the case, this could lead to delays, returns and a poor delivery experience. Some customers might refuse delivery, rather than pay these charges.

Three options to consider

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 in the pre-advice to us for the items sold through the 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 for IOSS yourself or choose one of the widely available third party IOSS solutions. You will then be able 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 you give to us.

3. Postal Delivery Duties Paid (PDDP)

PDDP is currently undergoing trial, due to be operational by July. If IOSS isn’t for you, or you are sending items above €150, this may be the answer. PDDP allows you to calculate and collect VAT from your customer at the checkout and to pay the EU tax authorities via Royal Mail.

So what’s best for you?

Whichever IOSS solution you choose, Royal Mail can despatch your items and ensure they get delivered across the EU without delay. Here are the different options at a glance to help you decide what best suits your business.

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 you are despatching goods from Northern Ireland to EU you can use the One Stop Shop (OSS). Details are still being finalised but you will not need to provide a OSS registration number to us.

Once registered for IOSS in only one EU country, VAT can be collected at your online checkout and paid on all EU sales by submitting a single monthly EU VAT return. By using IOSS, our delivery partners will not charge import VAT or a handling fee.

You can find out more information about these changes, published by the European Commission, here and further guidance provided by the UK Government here.

What IOSS solutions are available

Register and file your own EU VAT returns

Register yourself for IOSS

Once registered, all you need to do is input your IOSS number into the correct field, when requested, on the Royal Mail shipping platform you use. Alternatively, you could consider a third party assisted option.

Assisted IOSS options

If you don't want to register for IOSS yourself, there are a number of 3rd party options widely available to you such as Taxamo Assure. Perfect if you simply want to concentrate on just the selling. See below for further details.
 

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 type of third party solution will allow you to comply with the new rules and ensure a smooth delivery experience for your customers.

Find out more & register here

Calculate the landed cost of your goods with Aura from Hurricane

If you register yourself for IOSS, or use a third party option you will need to calculate the landed costs of your goods. You can do this by using a third party such as, 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 and HS code look-up all in one API call.

Find out more & register here

Frequently asked questions about IOSS

The chances are that you will have questions about these changes and the options open to you. Take a look at the FAQs and their answers to help you find the right solution for you and your business.

Frequently asked questions about IOSS

As an alternative to DDU and IOSS, we are developing a Postal Delivery Duties Paid (PDDP) service. This is due to be operational by July.

For items valued €150 or more, IOSS cannot be used so PDDP is a solution that has a lower handling fee than DDU. It can also be used for items below €150, if IOSS is not suitable for you.

This 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.

If you need help calculating tax then Hurricane’s Aura service can do that at your checkout, also providing a Prohibited and Restricted Goods check, Denied Parties check and HS code look-up all in one API call.

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

Find out more about IOSS and PDDP

Please note: If you are despatching 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 in one single 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 consumers in all EU countries doesn’t exceed €10,000 you can continue to charge UK VAT to your EU customers.