The Import One-Stop Shop (IOSS) was implemented to ease the process of collecting VAT on goods imported into the EU whose value is less than or equal to 150 Euros. To e-commerce sellers, IOSS provides a simpler system to collect, report, and remit VAT directly to the EU tax authorities.

But failure to comply with IOSS regulations may pose significant threats and problems with customs. Anyone selling across borders into the European Union must understand these risks.

Non-compliance penalties

Violation of the IOSS requirements may lead to administrative and monetary fines. The actual repercussions are different in each EU member state, but typical examples include:

·  Fines imposed on failure to submit or incorrect VAT filings

·  Interest on unpaid VAT

·  Further assessment if tax authorities discover other discrepancies.

To illustrate, in case you underreport VAT or do not file your monthly IOSS return, tax jurisdictions can enforce fines based on the amount of unpaid tax. Constant failure to comply might increase the intensity of the punishment and can also lead to audits or more serious investigations. This may lead to unforeseen expenses and lost business reputation.

Delayed deliveries

Non-compliance with IOSS rules can disrupt shipping and delay deliveries. This is the biggest hindrance for entrepreneurs doing global trade. Customs authorities might flag shipments at the entry point when VAT is not correctly declared. They may demand extra documentation or cash before goods are released. This may delay clearance.

To online sellers, even a delay of the slightest nature may influence customer satisfaction. It can also escalate the cost of running the operation. There is the possibility of:

·  Orders being held on the border

·  Orders being sent back to the country of origin

·  Charged storage fees.

This would interfere with your supply chain and damage the credibility of your business.

Seizure of goods

In more severe cases, persistent non-compliance may result in the seizure or blocking of goods at the port. Under IOSS, the EU customs agencies are allowed to intercept deliveries when the VAT requirements are not fulfilled. This implies that until the problem is solved, your products are not available to the customers. This may lead to lost sales and more administration.

Blocked shipments may also cause the scrutiny of your whole importation procedure. The customs authorities might insist on evidence of VAT collection and transactions. This can be time-consuming and stressful.

The impact on business operations

In addition to monetary fines and customs problems, not following the rules of IOSS may hurt your company in other, less evident ways. Late or lagging deliveries may have an impact on customer confidence. It might increase customer returns.

Recurring offenses can also affect your capacity to cooperate with logistics partners since the carriers usually demand that sellers produce evidence of appropriate VAT registration and compliance.

Also, compliance problems are often a burden to the administration. Directors might have to find accountants, tax consultants, or legal counsel to fix filings, answer audits, and negotiate with customs. This takes away business resources.

The takeaway

To prevent such problems, your company should prioritize IOSS compliance. This includes collecting VAT, timely reporting, and maintaining accurate records. Knowing the regulatory framework and proper compliance will help you enter the European market easily and protect your global trade.