EU: new rules to simplify collection of VAT on imports
The Council of the European Union has adopted new rules to simplify the process of collecting value added tax on imports of goods. The change shifts the obligation to pay VAT on EU imports from the consumer to the supplier. The aim is to encourage the use of the Import One-Stop Shop, or IOSS scheme.
The Import One-Stop Shop (IOSS) is an existing system that serves as a central point for importers of goods from third countries into the EU. The system greatly simplifies the declaration and payment of VAT, as it allows for a registration in a single EU member state even if the goods are then sold throughout the EU.
The new rules will require traders or digital platforms from outside the EU to pay VAT in the member state of the goods’ final destination. This should encourage wider use of IOSS, as not using the system would mean having to register in each member state where the goods are sold.
Thanks to IOSS, it is possible to pay VAT upfront, i.e. already at the moment the goods are purchased by the consumer, rather than at the border. This protects the member states' tax revenues and ensures compliance with import VAT rules, while it also shifts the administrative burden of collecting VAT from customers to platforms, making the whole process much simpler for end consumers.
The newly adopted directive will be published in the EU’s Official Journal and become valid twenty days after its publication. The changes will be effective from 1 July 2028.