What is an IOSS Number and Its Benefits for E-commerce?

What is an IOSS Number and Do I Need One?

The Import One Stop Shop (IOSS) is a VAT compliance system introduced by the European Union (EU) to simplify the collection and remittance of VAT for e-commerce businesses shipping goods to EU customers. Designed specifically for non-EU businesses, the IOSS streamlines the VAT process for cross-border sales under €150. But what exactly is an IOSS number, and how does it work?

An IOSS number for shipping allows businesses to register in a single EU member state and handle VAT compliance for all sales across the EU. This number ensures that VAT is paid at the point of sale, rather than at the border, creating a smoother buying experience for customers and reducing customs delays.

Using your IOSS number means that VAT won’t be collected by customs at the border. Instead, businesses handle VAT through a monthly IOSS return, simplifying compliance across the EU.

When Do You Need an IOSS Number?

Here’s when the IOSS number comes into play:

The goods are outside the EU when sold.
They are shipped in consignments valued at no more than €150.
The goods are not subject to excise duties (e.g., alcohol or tobacco).

For more details on VAT compliance and shipping, you can refer to EU VAT compliance for non-EU businesses.

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What is an IOSS Number?

An IOSS number is a 12-digit alphanumeric code that businesses use to declare and pay VAT for goods under €150 that are sold and shipped to customers within the EU. By using this number, you ensure that import VAT is collected at checkout, preventing your customers from being charged additional fees upon delivery.

IOSS Number Example:

Your IOSS number looks like this:

IM 123 456789 0

IM indicates that it is an IOSS number.
The first three digits (e.g., 123) represent the ISO numeric code of the EU member state where your business is registered:
- 208 for Denmark
- 250 for France
- 276 for Germany
- 380 for Italy
The next six digits (e.g., 456789) are a unique identifier assigned by that member state.
The final digit (e.g., 0) is a check digit.

Looking for more information on how this fits into international shipping? Check out our guide on shipping processes.

Why Did the EU Introduce IOSS Numbers?

The EU introduced IOSS numbers to:

Simplify VAT collection for non-EU businesses selling to EU customers.
Combat VAT fraud, which has long been a challenge in cross-border e-commerce.
Level the playing field for EU and non-EU businesses by ensuring fair VAT collection across all sales within the EU.

How to Get an IOSS Number for Shipping

For EU-Based Businesses:

If your business is located within the EU, you can register for an IOSS number directly through your local tax authority. This number will allow you to handle VAT for all EU sales through a single tax return.

For Non-EU Businesses:

For businesses outside the EU, you’ll need to appoint an EU-based intermediary to handle your IOSS registration. This intermediary will manage your VAT returns and ensure compliance with EU VAT rules.

Platforms like Amazon and eBay offer their own IOSS numbers to simplify the process for sellers using their platforms.

Steps to Register for an IOSS Number:

If you’re within the EU: Obtain an IOSS VAT number by registering directly with your Member State’s tax authority.
For non-EU businesses: You can acquire an IOSS number through an EU-established intermediary who manages VAT filings on your behalf.
Using online marketplaces: If you’re selling through Amazon or eBay, they handle VAT collection and provide an IOSS number once registered

Do I Need an IOSS Number?

The IOSS number is optional but highly recommended for businesses engaged in cross-border e-commerce within the EU. If your goods are valued at €150 or less, having an IOSS number will streamline the VAT process and improve the customer experience by ensuring VAT is handled upfront.

Without an IOSS number:

VAT will be collected at the border, leading to delays and additional costs for customers.
You may face higher administrative burdens, as you would need to ensure VAT compliance in multiple EU member states.

IOSS for E-Commerce Businesses

For e-commerce businesses, the IOSS system simplifies VAT collection and remittance. By using an IOSS number, you:

Avoid customs delays for your customers since VAT is already paid.
Provide a seamless checkout experience without hidden fees, improving customer satisfaction.
Manage VAT obligations for all EU countries through a single registration and monthly filing.

For more information on streamlining your fulfillment process for the EU, check out our guide on Amazon FBA door-to-door shipping.

IOSS vs. DDP Shipping: Which is Better?

When shipping to the EU, you may wonder whether to use IOSS or Delivered Duty Paid (DDP) shipping. Here’s a comparison:

IOSS:

Best for consignments under €150.
VAT is collected at the point of sale, ensuring smooth delivery.
VAT is declared and paid through a single monthly return.

DDP Shipping:

Ideal for shipments over €150.
The seller takes full responsibility for customs clearance, duties, and VAT.
Ensures a seamless customer experience, as all fees are pre-paid.

For shipments over €150, businesses may find DDP shipping more beneficial. It guarantees that all taxes and duties are paid upfront, avoiding unexpected fees at delivery. Learn more about the differences between IOSS and DDP in our shipping guide.

VAT Rates by EU Country

One of the complexities of selling to EU customers is the variable VAT rates across different countries. Under the IOSS system, you must apply the VAT rate of the customer’s country at checkout. Here are a few examples:

Germany: 19%
France: 20%
Italy: 22%
Hungary: 27%

It’s essential to keep track of these rates to ensure accurate VAT collection.

Alternatives to IOSS for Shipments Over €150

If your shipments exceed €150, the IOSS system does not apply. In these cases, businesses may consider the following alternatives:

DDP (Delivered Duty Paid): The seller takes responsibility for all customs duties and VAT, ensuring a smooth delivery experience for the customer.
DDU (Delivered Duty Unpaid): The buyer is responsible for paying customs duties and VAT at the border, which can lead to delays and additional charges.

Choosing the right shipping method depends on the value of your goods and your business model.

Workflow to help you decide if you need IOSS or not_Super_Internationalshipping.com

Final Thoughts on IOSS and VAT Compliance for EU Sales

Registering for an IOSS number offers a streamlined solution for non-EU businesses selling goods under €150 to EU customers. It simplifies VAT remittance, reduces customs delays, and improves the overall customer experience. For shipments over €150, DDP shipping may be a better alternative.

Whether you choose to register for an IOSS number or opt for DDP shipping, understanding EU VAT rules is crucial for ensuring seamless cross-border sales. If you need assistance with IOSS registration, DDP shipping, or VAT compliance, contact our team of experts today!

Frequently Asked Questions (FAQs)

What is an IOSS number?

An IOSS number is a 12-digit alphanumeric code that allows businesses to declare and pay VAT for goods under €150 sold to EU customers.

How do I get an IOSS number for shipping?

You can register through an EU tax authority or appoint an intermediary if you’re a non-EU business. Platforms like Amazon may also provide an IOSS number.

Do I need an IOSS number?

If your business sells goods under €150 to EU customers, using an IOSS number is highly recommended, though not mandatory.

Why did the EU introduce IOSS numbers?

The EU introduced IOSS to simplify VAT collection, combat fraud, and level the playing field for EU and non-EU businesses.

Let us know if you need further assistance with IOSS registration or DDP shipping for your European orders. We’re here to help simplify your cross-border shipping! Free consultations and quotes are available within 24 hours.