The Import One-Stop-Shop

24 Nov
Mosaic

Simplifying VAT and Customs Duties on E-Commerce Exports from the UK into the EU

Are you a UK-based online trading business thinking about exporting goods worth £135 and under to the EU but not sure how the new VAT and Customs Duties rules work after Brexit?

You may have heard nightmare stories in the media about delays, bureaucracy and tax headaches encountered by some UK companies exporting e-commerce goods to the EU in the early post-Brexit days, the timing of which coincided unhappily with the worst of the Covid pandemic.

We work with many UK online businesses who do successfully export into the EU using a variety of methods including IOSS, Direct Duty Paid (DDP) and Delivered Duty Unpaid (DDU). We have also encountered some businesses who have stopped exporting into the EU because of actual and perceived problems, also some who have chosen to focus on markets further afield instead.

Despite initial teething troubles when we came out of the EU, feedback we have had in recent times is that the Import One Stop Shop (IOSS) system, introduced by the EU in July 2021, has made the situation easier for some businesses. But it is certainly not a ‘one size fits all’ solution.

We thought we’d put this blog together to demystify some of the options available. This is meant as a starting point - you should check your position in detail with your legal and VAT accounts advisors. Further information is also available from Gov.uk as well as the European Union authorities.

What is The Import One Stop Shop (IOSS) and How Can It Help My E-Commerce Business Export More Easily Into the EU?

Simply put, the Import One Stop Shop (IOSS) is an electronic self-service portal introduced by the EU to reduce fraud and make the entire customs process faster and easier for retailers, customers, and customs officials.

The EU’s new VAT rules affect B2C consignments of standard goods including e-commerce sales (ie goods not being subject to excise duties such as alcohol) imported into the EU and valued at €150 (£135) or less.

For e-commerce retailers selling through marketplaces, the platform facilitating their e-commerce sales is responsible for charging and collecting VAT. The marketplace is the ‘deemed supplier’ for low-value consignments ie worth under €150 or less (£135). This really helps simplify the process and makes real costs easier for you to calculate and pass on to your customer seamlessly, thereby enhancing both yours and the customer’s experience.

IOSS registration is not compulsory, and you can always choose the ‘do it yourself’ route instead (DDP or DDU)– but check with your accounts and legal experts first. Your specialist tax advisors should be able to calculate the different costs attached to each export option based on your particular circumstances and advise you on the best options for you.

Relevant factors might include sales volume, value of the goods and type of goods exported, EU member state destination and shipping method. Allied to your market research, this price comparison should help you select the best markets for your exports, whether that is EU or rest of the world (ROW).

Shipping method could also be a factor when selecting your best markets for exports, bearing in mind that shipping/road vs.air freight can vary significantly in terms of costs, especially given the current Covid surcharge on air freight.

If you are a new business selling 5 low value items to the EU a week, for example, IOSS may not necessarily be the least costly route for you. You might want to do small-batch test campaigns first to test different markets and trial different export methods to see what works best for you. But always check with your tax or legal team first.

Some Advantages of IOSS*

1. Simplifies VAT procedures - no more multiple VAT filings in multiple countries
This allows UK sellers post-Brexit to register for VAT in one EU member state, collect VAT from all their EU sales and report on a single monthly IOSS VAT return.

2. Simplifies process greatly for sellers using online marketplaces
VAT liability (collecting and reporting) for sales in EU countries will fall on the marketplace rather than on the merchant if the consignment is valued at less than £135 (€150). This means that UK online businesses who only use online marketplaces may now be able to end any existing EU VAT registrations, as they will no longer be responsible for collecting and reporting VAT.

3. EU-based customers won’t be facing unexpected VAT payments on purchases of goods sold in the UK as it is all calculated once, at the point of purchase. This will provide customers with a better experience and help build consumer trust when buying from UK sellers.

4. Shipments containing a valid IOSS number will not be subject to import VAT, which may help them move through customs quicker.

5. Northern Ireland-based companies (NI) may enjoy an exemption threshold.
NI firms can join the alternative intra-EU OSS scheme. Providing their sales to the EU don’t exceed £8,818/€10,000 per annum, NI-based organisations will be exempt from paying VAT. Details of the intra-EU OSS scheme can be found here: https://www.gov.uk/government/publications/eu-e-commerce-package/eu-vat-e-commerce-package and https://ec.europa.eu/taxation_customs/ioss_en

6. Speeds up UK sellers’ EU shipments by creating a fast-track customs clearance ‘green channel’ for consignments not exceeding £135/€150.

7. Shipping can be cheaper than the DDP alternative.

*these guidelines are not intended as a substitute for specialist legal or accountancy advice

Some Drawbacks of the Reformed EU VAT Rules, including IOSS*

1. Previous VAT exemptions for SMEs on EU shipments worth £19/€22 or under have now been removed Meaning that these shipments will now be subject to VAT. These low value goods will therefore also require formal customs clearance, although most goods valued up to €150 remain exempt from customs duties. What this means in practice is that around 26,000 UK e-commerce sellers will need to register for VAT for the first time or stop selling to the EU. If they use IOSS, however, this can greatly ease the burden.

2. EU estimates suggest it will cost around £6,900 for each UK company on average to register and comply with IOSS regulations as a ‘non-Union’ user. This excludes Northern Ireland sellers.

3. Unlike EU-based One-Stop-Shop users, UK-based IOSS users* don’t qualify for the new £8,818/€10,000 threshold before they need to pay VAT.
*Northern Ireland sellers (under the terms of the Northern Ireland Protocol) do retain this option.

4. IOSS only applies to deliveries of items valued under the £135/€150 threshold
For all goods over that amount, UK businesses have three options:

  • ensure their customer pays the import VAT at Customs
  • offer the option of delivering with all duties paid (DDP)
  • or hold stock somewhere in the EU and register for VAT there

5. Confusion still exists around registration and appointing an intermediary to register and file returns or whether this requirement is waived for UK sellers because the UK-EU trade deal includes a tax and VAT mutual assistance agreement.

The Republic of Ireland recently stated, for example, that it doesn’t yet recognise the VAT mutual assistance agreement so it still seems that an intermediary agent is needed there at the time of writing, whereas France and Germany have recognised the agreement for UK sellers so no intermediary is required – although having one might help make life easier. This patchy approach is not very helpful for UK sellers at the moment.

Specialist advice is available from official VAT Intermediaries registered in the EU and they can help you navigate the whole process, advise on loopholes and represent you in all 27 EU member states. This could be a useful starting point if your e-commerce business is serious about exporting into the EU, but one which will unfortunately come at a price.

*these guidelines are not intended as a substitute for specialist legal or accountancy advice

Useful Checklist for your Business

  • Identify which areas of your e-commerce business are impacted by the new EU VAT rules
  • Assess your VAT accounting needs for the EU: identify and apply the appropriate VAT rates in multiple jurisdictions whether going for IOSS or an alternative
  • Consider registering for IOSS platform if you want to use a single registration to pay VAT throughout the EU for B2C shipments up to €150
  • If you do register for IOSS, you may need to appoint an intermediary to handle tax compliance on your behalf in the EU if you don’t have an EU-based establishment
  • Review and potentially cancel existing foreign EU VAT registrations if you wish to replace these with a single IOSS registration
  • If you choose not to register for the IOSS platform, you need to arrange an alternative way of paying VAT and customs duty in all the jurisdictions of interest instead
  • If you are selling through an online marketplace, you might want to contact them to understand and confirm who is responsible for VAT for your B2C shipments up to €150
  • If you choose to pass on import charges to your consignee, you may be best advised to inform them upfront that import fees will be due for their shipment to avoid unwelcome surprises and rejection of the consignment at the other end. You may also need to check your t&cs to ensure that your position is clear and that you are covered
Useful references:

**https://www.gov.uk/government/publications/eu-e-commerce-package/eu-vat-e-commerce-package

https://en.hermes-supply-chain-blog.com/new-eu-vat/

UPS Webinar: https://www.youtube.com/watch?v=zQwIa-5jv-c

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MiWorld for eCommerce

Mosaic MiWorld Fulfilment

 

MiWorld for Charities

Mosaic MiWorld Response

 

FMCG

If it moves fast, we’ll fulfil it and fast. Our pick accuracy rate is 99.99% and same-day dispatch rate 99.99% . From alcohol to vitamins to zen yoga products, we cover the whole alphabet of fast-moving consumer goods, delighting your customers as well as your accountants.

Vitamins, Health & Nutrition

From chewable gummies to protein powders, CBD oils and nutritional supplements , we’ll help you keep your customers topped up on their important nutrients. We are organically certified with extensive experience of handling vitamin products. We operate strict FIFO and batch control, allowing you to track and control your stock.

Shelf-stable food & drink

We fulfil a diverse range of food and drink consumables from our clean, ambient distribution centre for several prestige clients, some of whom have Fairtrade and Organic Certification. From teabags, filter coffee and snack bars to wholefood crisps, organic chocolate and mineral water, we understand how important it is to protect these goods, and we handle them with kid gloves so that they arrive in perfect condition. We specialise in handling glass items such as coffee jars and sets of jam too, using specialist packaging which ensures their safe arrival.

Hair & beauty

We understand that hair and beauty products are personal for your customers, and that they want their orders to arrive as quickly as possible and in pristine condition. We can personalise your product with our in-house personalised print-on-demand service or use bespoke packaging which is on brand for you. We have extensive experience of handling hair products and organic hair products including premium shampoos, conditioners, serums – also luxe styling tools. We also fulfil orders for many cosmetics, beauty and perfume brands.

Fashion

Socks, underpants, sandals, shoes, gloves, athletic clothes, streetwear, hoodies, t-shirts – if your clients wear it we’ll fulfil it! We have extensive experience in this field, including specialist fulfilment for prestige sports teams. We even handle orders for pet clothing!

Stationery, Books & Cards

We know that your stationery and card orders need to arrive on time and in perfect condition – our clean distribution centre and immaculate packaging ensures just that. We fulfil stationery orders for over 50 clients, from gift packs, to posters, to pens, books, pamphlets and birthday cards. We even ship Bibles for prestigious clients.

Gifts & luxury products

Fulfilling gifting and luxury orders are our speciality. We understand how important these orders are for your customers, and so we ensure perfect packaging and quick delivery. We’ll collate kits for you, if needed, and we can use your branded packaging. We can even make it personal with our (in house) personalised print-on-demand service.

Pet products

From pet beds to harnesses, from everyday pet food to specialist worming tablets, we have handled it all. We can even fulfil orders for pet clothing!

Home accessories & small electronics

From mugs, teapots and room diffusers, to headsets, phone charging cables and specialist devices, we can help your home accessories and electronic online business grow. We also handle electronic games and specialist hearing protection devices.

Garden products

We’ll handle your orders for garden accessories and equipment, including garden ornaments, tools, accessories, floristry supplies - we’ll even handle your bulbs, seeds and garden gift sets. We can even collate bespoke garden subscription gift sets for you.

Personalised subscription boxes

We have seen massive growth in the popularity of subscription boxes in our clients’ online businesses. We collate and fulfil subscription boxes for several clients of all sizes, using highly branded packaging. We can even personalise orders thanks to our in house print-on-demand service.

Charity trading & virtual gifts

We are charity experts here at Mosaic and we fulfil orders for over 50 well known UK charities. We meet and surpass strict compliance requirements rightly demanded by our charity clients, including handling organic, vegan and Fairtrade products.

Alcohol

We are licenced to store and fulfil orders for alcohol products here at Mosaic, and we have done so for several significant clients for many years. We specialise in fulfilling alcohol subscription orders, and we’ll collate the bespoke kits for you if you like.

Toys, games & sports

We can’t tell you how many orders for toys, games and sports we’ve fulfilled over the past 13 years or so! One of our longest-standing clients is a toy company specialising in educational toys. So we know how important it is for these orders to arrive in time for someone’s birthday or Christmas. Our client list also includes several games, games equipment and electronic games companies. And sports – we have fulfilled orders for clients at the very top of their game!

View our Sports Fulfilment services here

Organic, vegan & fairtrade products

We are passionate about ensuring that our business is as sustainable as possible. We are certified by the Soil Association and we have FSC accreditation. We fulfil orders for many vegan, Fairtrade and organic clients, with years of experience in this area. Have a look at our sustainability policy too.

Advanced Warehouse Management System

Our Advanced Warehouse Management System ensures real-time view of every operation, including stock levels, incoming deliveries, outstanding purchase orders, allocations and despatch. Our Warehouse Automation processes increase efficiency, shrink labour costs and accelerate fulfilment.

We give you end-to-end traceability and visibility:
  • Third-party logistics customer details
  • Delivery method selection
  • Current stock levels of products available
  • Purchase order imports
  • Existing order history
  • Order tracking

Data is automatically updated and adjusted, ensuring fastest customer enquiry response and enhancing customer experience.

Our 3PL Portal
  • Fully integrated with our warehouse management software and management system, OrderWise
  • Specifically set up so you can log in, view your stock levels within our warehouse, book deliveries, place and import orders
  • You have complete control over your deliveries and bookings
  • Direct booking of deliveries, access to the goods inwards calendar
  • Automated delivery and stock updates, advanced shipping notes and stock reports
  • The 3PL Portal eradicates the need for time-consuming ordering methods like spreadsheets, as well as emails and phone calls going back and forth
  • Everything you may need to know is accessible within the portal

Video coming soon!

Medical Products & CBD Fulfilment

Our Soil Association-certified organic distribution centre has capability and experience in fulfilling medical grade products including pharmaceuticals, medical devices and PPE(personal protective equipment). Our processes include strict batch and temperature control to ensure that your compliance and regulatory requirements are met and exceeded. Our cloud-based software ensures total visibility, control and tracking around your Best Before (BBE) End dates, barcodes and serial numbers, so that your stock can be monitored and managed with total accuracy.

We recognise that this is a specialist area and we can (and do) build bespoke solutions around our clients’ specific needs. We would be pleased to discuss how we can help you in further detail. We can also handle the rapidly growing CBD fulfilment sector, whether this is in the form of gummies, tablets, creams, ointments or oils.

Competitive prices

We know our prices are competitive. We also give you value for money with our highly trained and experienced staff, expert processes and state of the art systems.

As a company group we have over 46 years’ experience serving over 200 UK charity clients of all sizes. We give you excellent value for money in return for our efficient charity solutions – as seasoned charity experts, we understand and cater for your needs better than most, at a fair price point for your not-for-profit organisation. Our solutions have been specifically designed around our charity clients’ needs, by our extensive team of charity-expert IT developers. We are also able to deliver economies of scale because we are one of the UKs largest, most comprehensive providers of response, payment, and fulfilment services to the charity sector.

Driven by Technology

Our company group has a team of 19 in house IT developers spread across two university sites. We are tech experts, and we constantly strive for and invest in the best technology, processes and systems. Our cloud-based software and easy to use single platform client portal also gives your charity the edge because of our state of the art insight and reporting functions.

Quality Assurance Guaranteed

We have a team dedicated to quality assurance so that from the start to the end of your projects, quality is monitored and assured when it comes to delivering our solutions.

Dedicated Account Managers

We know how important it is to have a real human being at the end of phone, one who is highly trained, who understands and anticipates your needs and who quietly gets on with inbound call centre work, whilst you focus on your main priorities instead. Your account manager is specifically trained to be a charity-expert, and they will work with you to ensure that you have a smooth client journey, with reporting and updates as standard. We understand that you are outsourcing to us because you are busy, and our account managers ensure a smooth, fast, efficient and cost-effective service which does not add extra complications or layers of work to your working day. For more information on our Account Management services click here.

Compliance Comes as Standard

We fully understand that compliance is of fundamental importance when it comes to your charity’s transactions. Because it is for us too as a business. We also know that electronic security is of the utmost importance. With Mosaic, you will receive watertight compliance and security standards. Take a look at our accreditations, certifications and cyber security here.

Charity Trading & Fulfilment

If your charity runs a dedicated online shop selling cards, homeware, toys, gifts, or anything else for that matter, Mosaic can support your eCommerce fulfilment needs.

Not only do we have vast eCommerce fulfilment experience, but we also have a deep understanding of how charities work.

Mosaic provides tailored charity fulfilment solutions through our IT Ecosystem, MiWorld, offering 24/7 visibility of your orders, courier tracking, and integration with multiple marketplaces and inventory platforms.

MiWorld is our turnkey eCommerce solution for charities, enabling us to support your Head Office staff in delivering e-fulfilment excellence and driving additional revenue.

Our suite of added-value solutions, available via our user friendly IT Ecosystem, also means that we can offer a fantastic customer and supporter journey, from donation processing to order dispatch. With easy access to insights and reporting functionality, to help your organisation spot opportunities and thrive.

Payment Processing

We can handle all your charity’s payment processing needs, whether that’s our charity-friendly, flexible and secure Direct Debit Management service, or Banking and Thanking solutions.

We handle online donations and provide secure online payment solutions.

Our other services include GiftAid capture, In-Mem, building bespoke Customer Fundraising pages, personal supporter communications and customised online shops.

Charity Response Handling

We have the specialist knowledge, capacity and experience required to help charities with all their Response Handling needs. Our omnichannel solutions are delivered with the strictest security standards and in a totally secure, compliant environment.

Check out some of the services we provide in this video.

Best in class for service

We have over 46 years of expertise in the not-for-profit sector as a company group*. This easily makes us one of the most experienced and comprehensive suppliers of charity response, payment processing and charity fulfilment solutions providers in the UK.

Let us handle your back-office workflows and work overflows with our painless and seamless solutions. We’ll also help you with your payment processing and your charity’s fulfilment. We can even personalise your print to demand, including your charity’s pack fulfilment, kit collation and virtual gifts.

Our quick campaign onboarding turnaround times will enable your charity to respond quickly and proactively to emerging crisis situations. We will support you with those time consuming but critical back-office jobs, administrative tasks, insights and inbound calls, allowing you to focus your energies on increasing your charity’s impact instead.

*Companies within our company group MFS Group co Limited collectively have over 46 years of experience in serving the not-for-profit sector.

Charity-expert empathetic staff

With our extensive experience in the fundraising sector (over 46 years* to be precise) and our continual investment in the best people, processes and IT security systems, we are confident that we are the most experienced and comprehensive supplier of charity response, payment processing and charity fulfilment solutions in the UK.

We serve over 60 charity clients of all sizes, always highly trained and working to scripts where needed. Calls can be monitored daily for quality by our experienced managers and we send you regular sample calls, which are selected at random. This is an add on service, so you only have to pay for this if you need it.

*Companies within our company group MFS Group co Limited collectively have over 46 years of experience in serving the not-for-profit sector. This easily makes us one of the most experienced and comprehensive suppliers of charity response, payment processing and charity fulfilment solutions providers in the UK.

80 seat contact centre open 24/7

Our 80-seat contact centre team are experienced charity-experts providing specialist, award-winning inbound call centre services to over 60 leading UK charities of all sizes.

With our extensive experience in the fundraising sector (over 46 years* to be precise) and our continual investment in the best people, processes and IT security systems, we are confident that we are the most experienced and comprehensive supplier of charity response, payment processing and charity fulfilment solutions in the UK.

Our team members are highly trained and work to specialised scripts where the charity requires this. Our contact centre team are treated like human beings and are not on regimented time limits when speaking to clients.

Our team members are given a finite number of charities so that they can get to know and understand the charity, their services and/or products and the charity’s supporters well. Our services are delivered with empathy and a smile.

Calls can be monitored daily for quality by our experienced managers, and we can send you regular sample calls, which are selected at random. This is an add-on service, so you only pay for this if you need it.

*Companies within our company group MFS Group co Limited collectively have over 46 years of experience in serving the not-for-profit sector [link to MFS Group co page]. This easily makes us one of the most experienced and comprehensive suppliers of charity response, payment processing and charity fulfilment solutions providers in the UK.

View MFS Group

Emergency & one-off appeals

We understand that charities need to respond quickly to emerging situations when it comes to emergency, one-off fundraising campaigns and appeals.

We exist to support you and your supporters with your work overflows and your back-office tasks when you need us the most. We can also handle your everyday workflows, so you can focus on your charity’s purpose instead.

We can support you during:

  • Your peak campaigns
  • Peak fundraising times such as Christmas or Easter
  • Or when you need to launch an emergency, one-off campaign quickly

We have over 46 years of expertise in the not-for-profit sector as a company group, MFS Group co Limited.This easily makes us one of the most experienced and comprehensive suppliers of charity response, payment processing and charity fulfilment solutions providers in the UK.

Let us handle your workflows and work overflows with our painless and seamless solutions.

Our quick campaign onboarding turnaround times will enable your charity to respond quickly and proactively to emerging crisis situations. We will support you with those time consuming but critical back-office jobs, administrative tasks, insights and inbound calls, allowing you to focus your energies on increasing your charity’s impact instead.

Work overflows

We exist to support you and your supporters with your work overflows and your back-office tasks when you need us the most. We can also handle your everyday workflows, so you can focus on your charity’s purpose instead.

We can support you during:

  • Your peak campaigns
  • Peak fundraising times such as Christmas or Easter
  • Or when you need to launch an emergency, one-off campaign quickly

We have over 46 years of expertise in the not-for-profit sector as a company group, MFS Group co Limited. This easily makes us one of the most experienced and comprehensive suppliers of charity response, payment processing and charity fulfilment solutions providers in the UK.

Let us handle your workflows and work overflows with our painless and seamless solutions.

Our quick campaign onboarding turnaround times will enable your charity to respond quickly and proactively to emerging crisis situations. We will support you with those time consuming but critical back-office jobs, administrative tasks, insights and inbound calls, allowing you to focus your energies on increasing your charity’s impact instead.

Lottery & Raffles

Our services include, but are not limited to, the following:

  • Processing responses from raffle tickets
  • Fulfilling and managing additional ticket requests
  • Hosting draws for charities
  • Supporting charities as an External Lottery Manager (ELM)
  • Processing and coding all entries after the closing date as donations
  • Providing an electronic ticketing and draw management system
  • Conducting early bird or fast responder draws
  • Granting access to a full stack of reporting tools

For more information please visit our Raffles & Lottery page.

Video coming soon!