IOSS Information for clients
Please note that this document is for information based on our experience as we
have worked through this process, we are not offering advice.
These changes affect shipments from outside Europe and domestically within Europe in different ways. This article specifically relates to orders shipped from outside the EU into Europe. e.g. From Milton Keynes to any EU country.
Detailed information can be found here:
From July 1st, new VAT and import rules are expected to be implemented for sales to Europe. This means various changes that will affect sales from the UK into Europe:
Retailers who are registered for the IOSS scheme can collect and remit VAT for European sales for shipments valued at less than 150 Euro
If VAT has been collected and the shipment is sent with a valid IOSS number, import VAT will not be collected from the customer.
For shipments valued over 150 Euros then a similar process to the current one will apply. VAT cannot be collected by the retailer and import VAT will be charged to either the customer or shipper.
This will generally improve the shipping of goods into Europe as there will no longer be Import VAT required on the majority of goods we ship into Europe.
For sales where Ochre handles your payments or you are selling via Bandcamp IOSS registration is not required.
If you sell via your own payment gateways and handle your own taxes then you may wish to consider registration for IOSS. This is done through a EU country of your choice. We are currently advised that businesses outside the EU must appoint an intermediary to do this. Ireland is the usual choice of country for application for English speaking businesses, though you may find that they are not accepting applications at the moment, due to businesses outside the EU having to appoint an intermediary. It is expected that this requirement will be removed for UK based businesses in the coming months.
This scheme is not mandatory. If you do not have an IOSS registration, shipments to Europe will still incur import VAT and you should not charge VAT on your sales.
Action we have taken
We have applied for the necessary IOSS schemes with an intermediary for Ochre. This has only been able to happen in the last week as full details of intermediary requirements have only just been released.
We have been working with our integration partners to ensure that all the necessary information is being passed to the shipping companies. However we are aware that the full details of how Royal Mail and DPD will be handling these new processes is still subject to change.
We have upgraded our tax calculations to apply VAT for relevant orders if clients are registered for IOSS.
Upgrades have been made to allow the Tax ids and EORI numbers to be set per shipment in Whiplash meaning that it will be possible to set rules to allocate correct information to market place shipments.
Selling on Bandcamp and other market places
If selling on a market place such as Bandcamp, the goods should be shipped under the marketplace’s IOSS number.
Scheme go live
For this scheme to effectively go-live changes are needed in the customs processes of each European country, the postal carriers and retailers. There is currently conflicting information being provided about the readiness of each of these parties.
We therefore see the potential for disruption in shipping from 1st July and some time being required for the scheme to be working effectively for sales into Europe.
Whilst we have everything in place that we can to assist with a smooth transition we anticipate that there will be a period where the entire data flow (including customs agents and carriers) required for this to be smooth to the customer is working correctly.
If following Brexit you reduced pricing to factor in not charging VAT, it will be necessary to update pricing again now. Implementation of pricing updates right away is advised as presales either in the system already or taken between now and your pricing update will still incur VAT when they ship. We can automate the update across your catalogue if you notify us that you wish to do this.
VAT rates vary from country to country, but a single EU price is needed, so we recommend a pricing increase of around 20%. There are no changes to VAT on digital sales so pricing changes are not necessary for digital products.