We have created this Brexit advice page in order to share updates with you as the actual facts and legislative changes are clarified. We will continue to share headline changes and reminders.
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Import One Stop Shop Scheme (IOSS) factsheet
On 1st July 2021, changes to the way goods will be charged Taxes and Duties will come into effect for organisations selling imported goods to buyers in the EU. The import One-Stop Shop (IOSS) was created by the EU Commission to facilitate and simplify the payment of VAT for distance sales of imported goods with a value not exceeding €150.
Here are the facts:
- For sellers registered with the scheme, IOSS makes the process easier for the buyer, who is charged VAT at the time of purchase.
- From July 1st 2021, ALL goods imported to the EU will be subject to VAT, i.e. the current VAT exemption for importation of goods up to €22 will be removed. The VAT rate is the one applicable in the EU Member State where the goods are to be delivered.
- Currently, low value shipments below €22 may be cleared with a Manifest Clearance, where multiple low value shipments are grouped under one declaration. With the EU decision to abolish the VAT relief as of 1st of July 2021, all shipments imported to the European Union (EU) will require a FORMAL Customs Declaration (1 per shipment).
- This new process is for goods up to €150. Definition of goods value: is intrinsic value (the price at which the goods are sold, excluding transport and insurance costs, unless they are included in the price and not separately indicated on the invoice). It is important to note that the threshold applies to the value of the consignment, not to each individual item.Goods over €150 will be taxed at importation in the EU Member State as per standard/existing procedure (this also applies where the overseas seller has sold several goods to the same buyer and these goods are shipped in a package amounting to more than €150).
- Different VAT collection possibilities available for B2C Shipments up to €150 are still available when not IOSS registered.
Import One-Stop Shop (IOSS) Overview of Changes
One-Time IOSS Registration
- In order to use the IOSS, the online seller (non-EU but with EU representation) must register for IOSS in one European Union country. Please note there are restrictions around registration.
- Upon registration, the seller will be given one unique IOSS number which is valid for ANY country in the European Union.
- The online seller can assign an intermediary (tax representative) to deal with EU VAT compliance on their behalf, i.e. to pay the VAT amount to the EU Tax Authority (via a monthly VAT return).
- If the VAT has already been charged (see previous slide), then the seller must indicate the IOSS number in the Commercial Invoice data to the express operator.
- The express operator will then include the IOSS number in the Import Customs Declaration submission to the EU Customs Authorities – below an overview:
Different VAT collection possibilities available for B2C shipments up to EUR 150
With IOSS (for B2C only)
- Introduces an IOSS (Import One-Stop Shop) VAT collection model with the VAT to be collected by the seller at the moment of purchase for B2C shipments.
- Companies can assign an intermediary (tax representative) to deal with EU VAT compliance on their behalf, i.e. to pay the VAT amount to the EU Tax Authority (via a monthly VAT return).
- Key Advantage: ONE Single EU VAT Registration (covering all the 27 EU countries), different than current setup, which requires 1 VAT registration for each EU country in case of DDP.
Without IOSS (for B2C or B2B)
- Same as current process in place for shipments above €22 (where either the express operator pays VAT to Authorities upon import and then charges the shipper, or the shipper pays VAT directly to Authorities with its own deferment account).
Information provided by Flight Logistics Group Ltd is in the context of guidance only, the content of this presentation therefore does not, in any way, constitute legal advice. Should you require a legal opinion, you must obtain that opinion from a properly qualified professional.
Additional resources are now being put in place for businesses to access more detailed Brexit guidance
The Government has launched a new package of on-demand video content to help businesses understand the new rules for doing business with Europe. You may view the full gov.uk press release here.
Businesses can get further information on 18 topics including importing and exporting, trade, data, and audit and accounting so for additional guidance register now to immediately access helpful video content.
Key Changes to Customs Requirements for Non-Document Shipments to and from EU Destinations
With effect from January 1st 2021 all non-document shipments to and from EU countries will require the same customs declarations as are already required for Rest of the World non-document shipments. If you already use our MyFlight system to book and produce your non-document paperwork to the Rest of the World you will be familiar with the process and our system will produce your EU shipping paperwork in exactly the same way.
The information required to ship a non-document item anywhere in the world will be identical:
- Sender and consignee address details
- Consignee contact telephone and email address (in case of duties and taxes due, Customs will contact the consignee for payment thereof)Full description of goods
- Reason for export
- Country of origin – guidance on formulating the country of origin information and creating a statement of origin if necessary can be found here
- Value for Customs (used to calculate any import duties or taxes on arrival)
- Commodity Codes (also used to calculate any applicable import duties or taxes on arrival) – click here for a useful guide to commodity codes
- A new and updated De minimis threshold list detailing current duty and tax limits globally can be found here
- Our commercial invoice template can be found here
- Our Proforma invoice template can be found here
Rules of Origin – for goods moving between the UK and EU from 1st January
One of the key benefits of the EU/UK Trade Agreement is the opportunity to avoid the payment of import duties if products originate in the EU or the UK. The origin rules for some products are quite complex and differ according to their HS commodity code. Full details and guidance are available here
In summary goods from EU countries may be imported into the UK duty free if either:
- the full duty rate is zero, or
- the product meets the preferential origin rules, and may be declared as originating in the EU. (The same process will work in reverse for product of UK origin being exported to EU member states).
In order for the zero percent preferential rate of duty to apply, it is necessary to be able to declare the goods as originating in the appropriate EU member state. (Not simply being shipped from an EU member State).
When claiming preference the importer should have “proof of the originating status of the product before claiming preference. This may be a Statement of origin provided by the exporter on a commercial invoice or other commercial document that describes the goods.
It is the importer’s responsibility to possess the evidence that the origin criteria for any product has been met prior to the importation. However there are some waivers available:
- Small consignments (for the UK up to £1000). So long as they are declared to the customs authorities as meeting the origin rules, some goods may be imported without the need for a formal proof of origin (a waiver). (The EU waiver is different as it does not apply to commercial transactions)
- for both goods imported from the EU to the UK and and vice versa, until 31 December 2021, traders do not need to have supplier’s declarations in place at the time the goods are exported.
If products do not meet the origin requirements then the full duty rate will apply. However if it is subsequently established that products do meet the origin requirements any duty paid can be reclaimed up to 3 years later.
Shipping to EFTA registered countries
There are currently no changes to the rules regarding shipping to EFTA destinations although negotiations are ongoing. To ship non-document items to Switzerland, Norway, Iceland and Liechtenstein follow our guide here
Authority for Customs Clearance
In order to avoid delays in post Brexit customs clearance for non-document items the form headed “Authority for a Customs Clearance Agent to act as Direct Representative” found here must be completed by clients – it should be printed on client letterhead, signed and authorised and returns via email to email@example.com. This authority will be held securely by us should we be required to submit it on your behalf to Customs and Excise.
For further information on authorising customs clearance and vat and deferment payments please click here
VAT & EORI
If you are importing into or exporting out of the EU from January 1st 2021 you must be EORI registered. EORI (Economic Operator Registration and Identification number) is separate to VAT registration but can be linked to it. An EORI number registered with HMRC is used in the process of customs entry declarations and clearance for both imports and exports to or from the EU and outside the EU. Whilst VAT registration enables the reclaim or payment of VAT on sales and purchases – they are 2 entirely separate activities. To move goods between Great Britain and the EU your EORI must start with the GB prefix.
You do not need to be VAT registered to obtain an EORI number but the 2 often go hand in hand. Registration is free and straightforward and you can
For Northern Ireland
If you move goods between Northern Ireland and non EU countries you will also need an additional EORI for NI – this will start with an XI prefix. For help with this click here. You cannot apply for an XI EORI without already having a GB EORI – so apply for your GB EORI first please.
International standard for wood packaging
This includes art crates and pallets. All wood packaging must have the ISPM15 stamp. You should ensure that all palletised work we collect from you is compliant, if we have to re-palletise or re-crate this is likely to delay your shipment and add in extra costs.
Customs Requirements for Overseas Postal Shipments
All “non – document” items travelling by post globally (including EU destinations) will need similar paperwork to that which is already required for international courier and freight shipments. Anyone selling goods on-line to overseas clients will be affected. For further information click here