The next step

Further information on IOSS

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Selling goods to individuals in the EU: what are the pitfalls?

Zero-rated exports

All sales of goods that leave GB and are destined for any country (EU or non-EU) are zero-rated as far as UK VAT is concerned; they are all classed as exports . The reference to GB is important: Northern Ireland-based businesses are still part of the EU single market, so have different rules for EU and non-EU sales. You will need to review these rules if you trade in the province.

Tip. You must include all export sales in the outputs Box 6 of your VAT returns.

Trap. Always acquire and retain proof of export to supporting your zero-rating, in case of a future query by HMRC. The evidence should include both shipping and commercial documentation.

Low value goods

If you export goods to the EU with a total shipment value of €150 or less (about £135), there are special rules that can make the paperwork less complicated (and the sales more profitable) with a scheme known as the import one stop shop (IOSS) .You can register for the IOSS with any tax authority in the EU (see The next step ). It makes sense to choose Ireland because of the common language.

For all EU shipments below €150, you will charge “sales VAT” to your customers by issuing an invoice at the time you collect payment rather than having to pay import VAT when the goods arrive. You will then submit a monthly return to your chosen tax authority, to pay over the VAT you have collected from your EU customers.

Tip. The amount of VAT you charge to your customers will depend on the rate that applies for the goods in their country. This will be lower - in some cases - than the UK rate.

Trap. You must send the sales invoice with the goods and show your IOSS registration number on all invoices.

Monthly IOSS return

The tax that you have charged to your EU customers on low value shipments will be declared on a single IOSS return submitted monthly to the tax authority where you have registered. The return will be divided into the 27 different member states, so that the tax collected in each country can be recorded separately.

Tip. There will be no import duty on these sales because the €150 limit is a duty threshold throughout the EU.

Trap. The threshold is based on the total shipment value of the goods and not individual items within that shipment. For example, two print cartridges being sold for €80 each in the same shipment would be subject to import rather than sales VAT/duty - because €160 exceeds the threshold.

Online market place sales

If you only sell your low value goods to EU customers through an online market place (OMP), you will not need to register for the IOSS. You will make a zero-rated business-to-business sale to the OMP, and the latter will be responsible for paying and declaring sales VAT on its own IOSS return when the goods arrive in the EU.

Trap. The IOSS cannot be used if your shipment includes any goods that are subject to EU harmonised excise duties - typically alcohol or tobacco products.

Further information on IOSS