OSS is for businesses located inside the EU IOSS is outside
https://www.quaderno.io/blog/oss-or-ioss-eu-vat-one-stop-shop-rules-for-e-commerce
It is not for digital goods only
Topic summary
UK and non-EU e-commerce sellers face challenges implementing the EU’s new IOSS (Import One-Stop Shop) tax regime, effective July 1, 2021. The system requires charging destination country VAT rates on sales under €150, while sales above this threshold remain VAT-free until delivery.
Key Technical Issues:
- Shopify’s native functionality initially lacked proper €150 threshold implementation
- VAT must be applied only to orders under €150, but early implementations charged VAT on all orders or none
- Configuration requires adding IOSS number under Settings > Tax > EU > “Shipping to the EU” section (not within EU section)
- Debate exists whether shipping costs should include VAT in IOSS submissions
Registration Challenges:
- UK sellers cannot register directly with EU tax authorities due to lack of mutual assistance agreement
- Must use EU-based intermediaries (CrossBorderIT, Taxamo, EasyProject mentioned)
- Ireland rejected some UK applications; Sweden appears more accessible
- Registration fees and per-transaction costs vary significantly
Intermediary Solutions:
- CrossBorderIT offers IOSS number provision and Shopify app integration
- Concerns raised about their support responsiveness and unclear documentation
- Daily/weekly reporting requirements create manual workload
- Payment processing fees and multiple invoices increase costs
Current Status:
- Shopify eventually released IOSS functionality (April 2021)
- Royal Mail exploring DDP (Delivered Duty Paid) alternatives
- Some sellers avoiding IOSS registration, letting customers pay import fees
- EasyProject/Avalara mentioned as working solutions with automatic threshold handling
1 Like