The finance ministers of the EU countries have agreed on a new approach to the VAT Directive: Specifically, it concerns imports from online trade and the taxation of imports in the context of distance selling. This is according to a press release from the European Commission dated May 14.
Accordingly, the effectiveness of the Import One-Stop Shop (IOSS) system is to be improved. In particular, VAT declaration and payment are to be simplified,
the administrative burden for EU importers reduced, and the fight against VAT fraud further strengthened. Through a broader application of the system, the EU aims to simplify the processing of smaller parcels and ensure that VAT on online sales to consumers in the EU is levied uniformly.
Under the new regulations, more suppliers involved in distance sales worth up to 150 euros will be held accountable for import VAT. IOSS is thus set
to become a more attractive option for businesses.
Twelve million packages from non-EU countries per day
In 2024, an estimated 4.6 billion packages from non-EU countries entered the EU, equivalent to around twelve million packages per day. In 2023, VAT declarations through the IOSS system amounted to over 26.3 billion euros, representing an increase of 35 percent compared to the previous year.
While the use of IOSS remains voluntary, suppliers who choose not
to participate risk complicated and costly multiple VAT registrations across EU member states. In cases where a supplier fails to meet its obligations, member states may, through an alternative procedure, allow customers to pay VAT directly to release shipments.
Important step towards customs reforms
According to the EU Commission, increased use of the IOSS with the new directive aims to streamline the VAT procedure for imports and marks an important step towards more
