Delivering to EU from UK - Paying VAT and Duties

[RyanA2]

Hi,

We are a POD company and I am using a fulfilment partner to fulfil my orders and ship my products.   They use their own couriers and therefore will not pay the VAT or Duties once the product gets to the EU.  Which is understandable.  I don't want my customers to have to pay it and I am happy to.  My question is, in this instance how do I get around this problem? 

Thanks!

[Andrew]

Hi @RyanA2,

Hyde here from Shopify.

The best source of guidance for your tax status in your particular circumstances would be a local tax expert. What tax information we have is available here. Our document suggests that you will be able to select your incoterms:

 And if you don't want your customers to pay the duty (possibly because you're including the potential costs in your product prices?) then you might still need your fulfillment service to pay upfront and then invoice you?

I hope that helps!

All the best, Hyde.

[RyanA2]

Hi,

Thanks for your reply.  The issue here is that I want to have the taxes within my prices so that the customer does not have to pay them when the goods arrive in their country.  As I am not in control of the delivery I was hoping that the fulfilment companies would have a solution for this but it seems that there are none that do and none that are willing to pay the charges and invoice back to us, or at least none that have apps on the Shopify portal.  

Looks like drop shipping is not is not a great business model after all!

Thanks,

Ryan

[Andrew]

I completely get where you're coming from and why you'd feel that way. Brexit disrupted a lot of trade and standard shipping arrangements, so it would be surprising if there weren't some teething problems as the world adjusted. 

That said, the standard protocol is for any business to have shipping policies that dictate that the customer is responsible for paying customs fees associated with the delivery.

Then again, it’s important to note that, depending on the shipping method you choose, suppliers may intentionally mark the shipping label with a price that is lower than the original cost. This is common practice for dropshipping suppliers, as it protects your customers from additional taxation from customs. Lower price tags reduce the chance of packages being flagged whilst they’re processed at customs.

Oberlo users, for example, have already successfully shipped millions of products so far, and we haven’t received any complaints regarding invoices or low prices printed on packages. So you may want to add a shipping page explaining these policies.

Have you tried ordering something yourself to see if you get landed with import duties? That might be worth a go!

Wishing you the best of luck! -Hyde

[RobertFromEAS]

Hi Ryan,

I hope you solved your issues with EU sales. 
If you haven't, basically you need an IOSS number to be able to send goods to EU with simplified customs procedures, and without additional manual work and payments required from your customer at arrival of the goods. To be able to use IOSS, you have to collect EU taxes (based on your customers location) at the checkout.

To receive an IOSS number you need to register for IOSS.

IOSS registration requires fixed establishment in EU, or if you don't have establishments in EU, you need an intermediary for IOSS.
When you have an IOSS number, you can input the number to Royal Mail or other delivery partners online dashboard, and the IOSS number will be automatically delivered to the EU postal / customs.
Once a month you need to report all your sales to EU tax authorities and pay the collected taxes.

We have a fully automated system for all this, without any monthly or starting fees, transaction-fee only. We register you for IOSS, act as an intermediary, calculate taxes at checkout, collect the data for reporting, and file the report. Check us out at Shopify App store, and to get started book a meeting with us here