Help your e-commerce business thrive outside the UK with the IOSS

As a busy e-commerce business owner, we know that you’ll do all you can to ensure that your customers have the best and smoothest shopping experience with you.

However, sometimes processes come into play that can make the customer journey slightly more complex than you ever intended… and we’re pretty sure that delayed shipping with additional customs charges on orders from the European Union falls under that umbrella.

Luckily, there is something you can do to make shipping to the EU much simpler – signing up for the VAT Import One Stop Shop (IOSS). In this blog, we’ll share our expertise on what the IOSS is, and how it can benefit both your customers and your international sales.

What is the Import One Stop Shop (IOSS)?

The VAT Import One Stop Shop (IOSS) scheme is an initiative designed to simplify VAT compliance for businesses that import e-commerce to the European Union.

It allows a taxable person to register in a single Member State to declare and pay EU import VAT. When you are signed up to the scheme, the import VAT due is not collected by Customs but is instead collected by the HMRC through a monthly IOSS return.

As part of the scheme, the items you are selling must:

• be coming from outside of the EU at the time they are sold – ie. the UK
• have a consignment value that doesn’t exceed £135
• be sold to a customer within the EU

Without the IOSS, if a customer from the EU makes a purchase from your online store, they must wait for the postal service to contact them and request the customs payment before the item is then released and shipped – delaying delivery and potentially putting them off buying altogether.

By signing up to the IOSS scheme, your business can offer a more efficient shopping experience as VAT is accounted for at the point of sale instead, meaning your customers enjoy transparent pricing without the risk of unexpected charges upon delivery.

 

How does the IOSS work?

The IOSS operates on a straightforward principle – consolidating VAT obligations into a single platform for businesses importing goods into the EU.

When you choose to sell goods to consumers in the EU, your registration to one member state through the IOSS scheme allows you to charge VAT on your sales at the point of purchase – which is then reported and paid through that state, irrespective of your product’s final destination within the EU.

To leverage the benefits of the IOSS, you must include your IOSS number on outbound shipments, which is usually managed electronically. This number acts as a unique identifier for VAT purposes, ensuring that the VAT that has already been charged during the sale is seamlessly processed through the appropriate channels. When goods are imported into the EU, customs authorities can check this information quickly to verify the VAT status of your shipment, facilitating faster clearance and reducing delays at borders.

On top of this, the IOSS ensures that your e-commerce business offers EU customers a seamless shopping experience. Since the VAT is essentially bundled with the price of the item and any shipping costs, it’s collected at the point of sale, streamlining the purchasing process and eliminating the perception of ‘hidden extras’ and additional effort. This not only enhances customer satisfaction but also helps your business maintain a competitive edge in the bustling e-commerce market by providing clarity and ease of transaction.

 

What are the benefits of the IOSS to your business?

Signing up for the IOSS scheme presents numerous advantages for your e-commerce business if you want to scale outside of the UK.

These benefits include:

• The simplification of VAT compliance – by allowing businesses to register in a single EU member state, the IOSS significantly reduces both business administration and streamlines the customer journey. With productivity crucial in today’s fast-paced e-commerce environment, time is quite literally money, and efficiency is key to staying competitive.

 

• An enhanced customer experience – adopting the IOSS scheme ensures you improve your customer experience by providing a smooth and transparent buying process. With simplified VAT calculations and faster customs clearance, you can offer your customers fast and reliable delivery, thereby boosting customer satisfaction, increasing loyalty and gaining a competitive edge.

 

 

• Additional cost savings – without the IOSS scheme, your business may experience costs associated with compliance and administrative tasks due to the need for multiple VAT registrations across various EU countries. The financial relief of signing up to the scheme can be especially beneficial for smaller businesses that may struggle with the overhead associated with navigating multiple tax jurisdictions.

 

• Expansion into new markets – if you haven’t considered selling outside of the UK due to the complexity of the customs process, the IOSS may be your answer to expanding your sales into a new market. A huge benefit is that it empowers businesses to focus more on growth and customer engagement, rather than getting bogged down by bureaucratic processes – creating an exciting new opportunity for many small business owners.

 

How we can help with IOSS at The Pack Smart Group

Registering for the VAT Import One Stop Shop scheme involves several important steps that you must follow to ensure full compliance with the system.

From choosing a member state in which to register and accurately completing an online registration form, to using your unique IOSS registration number on all future transactions, invoices and shipping documentation – it may seem daunting to get started.

As experts in the fulfilment industry, we would certainly recommend this as a service and always suggest that our partners speak to their accountants to get set up.

We ensure that any goods shipped under the IOSS bracket for the businesses we work with contain the correct information – all of which is transmitted electronically.

While it might be difficult to understand the intricacies of VAT calculations, especially for businesses with diverse product lines, we know that the benefits of using the IOSS scheme can often greatly support the growth of your business, and work with you to make the fulfilment  process as simple as possible.

If you are focused on scaling your e-commerce business and are in need of a pick, pack and posting partner with a proven track record of offering unrivalled support, an enhanced customer experience, and a reduction to your administrative burdens, reach out to us today for a free, no-obligation chat about your options.

Ultimately, embracing the VAT Import One Stop Shop scheme can lead to streamlined operations, improved customer trust, and increased competitiveness in the ever-evolving e-commerce landscape. By taking proactive steps to navigate the complexities of the VAT process, we are confident that you can position your business for success in a dynamic and lucrative EU market.