EU VAT FAQ
The European Union (EU) made changes to Value Added Tax (VAT) rules, effective July 1st, 2021. Namely, the EU has removed the VAT exemption of €22, and VAT will need to be paid on all commercial items imported into the EU. This will apply if you sell and ship items to EU member countries. Gifts are not impacted by the new rules.
You can continue to ship items with Canada Post to the EU and the items will be presented to customs upon entry to the destination, as they are today. VAT, duties or other applicable fees will be collected from the recipient prior to delivery.
EU customs authorities have created an optional use portal called the Import One-Stop-Shop (IOSS), which allows you to declare and charge the VAT at the time of purchase (rather than collection at the door), and remit VAT payments monthly, using the IOSS portal. This can only be used for shipments with a value of less than €150. For shipments over €150, there are no changes to the collection of VAT, duties or other applicable fees on imported goods.
Use of the IOSS number is not mandatory. You can continue to ship items to the EU member countries, and all VAT, duties and other applicable fees will be collected from the recipient prior to delivery. There may be an additional handling fee charged at the door if not using the IOSS.
If you sell through an online shipping platform, you need to contact them directly to determine how the EU VAT changes will be managed.
Further Information:
Registration of an IOSS number for your business is not mandatory, and in these cases, the VAT will be collected at the door if you choose not to register. If you sell through an online shipping platform (like eBay or Etsy) you will need to contact the platform to see if they are registered for the IOSS.
Please note that in addition to customs, duties, VAT and other fees, some EU countries are also charging a handling fee for those items that are not using the IOSS method.
The IOSS is not allowed for goods subject to excise duties (like tobacco or alcohol) or gifts.
You will need to electronically send the IOSS number to the receiving post. The EU customs authorities strongly recommend to not print the IOSS number on the shipping label for fraud purposes. In addition, the receiving post may not accept IOSS numbers that are printed on the label and you will risk having your buyer pay for VAT twice.
Canada Post has set up a method for you to send the IOSS number electronically. Please see the question ‘I ship to customers in the European Union (EU) and I have an Import One Stop Shop (IOSS) number I need electronically sent with my package. How do I do this?’ for those instructions.
The European Union (EU) made changes to Value Added Tax (VAT) rules, effective July 1st, 2021. Namely, the EU has removed the VAT exemption of €22, and VAT will need to be paid on all commercial items imported into the EU. This will apply if you sell and ship items to EU member countries. Gifts are not impacted by the new rules.
Commercial customers will have the capability to electronically transmit an IOSS number to the receiving post in the EU when using one of the following Canada Post shipping systems:
EST Desktop and EST Online:
- Use the ‘Tax ID/IRS/VAT’ field.
- ONLY enter the IOSS number in the following format- IMxxxxxxxxxx
SnapShip and Shipping Manager:
- Under Step 5 ‘Customs’ section, enter IOSS number in the ‘Tax ID/IRS number’ field.
- ONLY enter the IOSS number in the following format- IMxxxxxxxxxx
Note: Commercial customers will not be able to transmit the IOSS number if creating a label at any Retail post office. They will need to use one of the shipping systems above and then drop the package off at a Retail post office.
Commercial customers using an online shipping platform (like eBay or Etsy) will need to receive further instructions from their online shipping platform. In the short term, if a customer shipping to the EU would like to include an IOSS number, they can do so by creating an account in SnapShip and following the instructions above.
The EU customs authorities strongly recommend to never write the IOSS number on the shipping label, due to potential fraud concerns. Rather, the preference is to transmit the IOSS number electronically. Canada Post can do this for you. Please see the question ‘I ship to customers in the European Union (EU) and I have an Import One Stop Shop (IOSS) number I need electronically sent with my package. How do I do this? ‘for those instructions.
If using the IOSS scheme, the IOSS number and the 6 digit HS code is mandatory. If these are not received, the item will be treated as ‘delivery duty unpaid’, meaning that the Value Added Tax (VAT) and possibly a handling fee will be collected from the recipient at the door.