Securing IOSS – 1st March 2028 unique consignment numbers for IOSS consignment shipments by non-EU participants
Following the March 2025 VAT in the Digital Age reform adoption, one of the first measures a measure to get under way is controls on Import One Stop-Shop (IOSS) regime.
For non-EU sellers or marketplaces using IOSS, a unique consignment transaction number will be created to match with sellers or marketplaces’ IOSS number. Customs will be able to check this number goods are declared in EC IOSS system to ensure shipment isn’t fraudulent using someone’s IOSS number to avoid paying import VAT.
Securing IOSS timetable:
- 2024: Fiscalis project group FPG053 established to review the solution to secure the IOSS. Now reviewing two options:
- IOSS seller or platform sends consignment data to Customs in advance for cross-checking; or
- Use of digital credentials (digital wallets) by IOSS registrants to transmit supply chain data (including underlying supplier) to Customs.
- 2025-26: Pilot establishment and operation;
- 2026: Evaluation of measure and Commission adoption with EDPS consultation;
- 2027: Implementation (including spec’s; development; and full testing);
- 1st Mar 2028: Launch
Note: the EU is proposing the €150 threshold for use of IOSS be withdrawn from 1 March 2028 as part of EU Customs Reforms. A plan to mandate IOSS in the EU VAT in the Digital Age reforms was dropped. Other incentives to promote adoption of IOSS are planned for the Customs reforms.
June 2024: EU VAT Expert Group revisits Import One Stop-Shop reforms
The European Commission’s VAT Expert Group (VEG) has been reviewing improvements to the July 2021-introduced IOSS regime. This was part of the e-commerce VAT package reforms. IOSS enables the pan-EU reporting of VAT collected on import consignments not exceeding €150.
VEG explores three IOSS faults
VEG identified a number of problems, and began exploring potential solutions.
- Fraudulent sharing of IOSS numbers, so e-commerce businesses can avoid paying VAT at customs or subsequently in an IOSS return.
- Platforms who may be acting as deemed supplier, cannot easily verify correct customs procedures have been performed by all the parties in the supply chain. Again, leading to potential lost VAT or customs duties.
- Physical checks on the exponentially growing number of parcels using IOSS are no impractical.
VEG is now engaging with IT experts on solutions to the above, including digital signatures for tracking and/or assignment of a unique parcel number, based around the IOSS number.
Dec 2021: reforms needed to remedy faults; mandating IOSS option; withdrawal of €150 IOSS threshold
Problems above were identified and explored back in December 2021. Whilst a largely successful launch, the new pan-EU reporting is under scrutiny for a number of fault lines. The EU and its VAT consultation groups are looking at fixes to remedy these. Following discussions with EU states in November 2021, the European Commission is planning to issue suggested remedies to the IOSS difficulties listed below in early 2022. Additionally, the following longer-term topics will be considered:
- mandating of IOSS and ending the Special Arrangements for couriers and postal services; and
- withdrawal of the €150 consignment threshold.
IOSS technical difficulties
- Double Taxation: EU IOSS double taxation solution is due in February 2022. This when VAT is incorrectly charged twice on an B2C imported low-value consignments now exceeding €150. Firstly, the sellers or deemed supplier marketplaces charges VAT at the point-of-sale. However, a second charge is then incorrectly charged at customs when there is no adequate acknowledgment of the first charge. A practical solution being evaluated is to report refunds via subsequent IOSS returns as a deduction against VAT due. This would be attractive:
- a simple reconciliation between the IOSS return and IOSS report would be possible
- The seller or marketplace receives the refund, and can manage the refund to the customer
- Fraudulent misuse of IOSS numbers. As anticipated in the design of the IOSS reporting regime, there is signs of sellers fraudulently listing a wrong IOSS number on imported packages without having correctly charged import VAT in the checkout. The EC will present ideas to remedy this issue in early 2022.
- Refunds on returns: It is still not transparent in some countries how the seller or marketplace may make a reclaim for the VAT charge where imported goods under the IOSS scheme are returned.
- Customs rules on B2B small value consignments. Under the EU’s Union Customs Code the rules under the right customs office to release into free circulation low value consignments sold on a B2B basis (Article 221(4) UCC-IA) require further clarification.
