Will Shopify implement the new EU tax regime for UK e-commerce sellers?

[Max1957]

On the 1st July the EU introduces a new tax regime for UK e-commerce distance sellers selling into the EU.  For sales under Euro 150, e-commerce sellers can opt to charge destination country VAT rates to speed up delivery.  For sales above Euro 150, sales will continue to be VAT free with the customer having to pay VAT / charges when the package arrives in the destination country.  Will Shopify be implementing this threshold so that VAT is included/excluded automatically, or will sellers have to process refunds above Euro 150 or use an external app?  Any help on this would be appreciated..

[Bibico_Admin]

Ok this does not seem conclusive but I understand the authorities are not prepared for this.

As long as you can confirm the VAT will be returned to us on a customer return this is ok.

[Dbaca]

This will be possible in a few weeks but not from day one. We have the functionality in the system we just need to make sure it works with the tax authorities. Stay tuned on this. 

[frasers]

I'm still a little bit confused. I use around 4 different third party logistic agent system to handle the shipping, orders ship from US, UK and China.

How to work it out?

[Dbaca]

Of course, IOSS is just for entry to Europe but to control your number we can get you some child accounts that you 3PLs can use. We can talk further about it. 

[Dbaca]

I think you saw we can support you with this by creating children accounts in our system so you know none of your 3Pl's are abusing your number.

[Foxxycarr]

@Dbaca I see you are based in San Diego and Sweden. My company is based in the UK can you advise that we are outside the scope of Swedish VAT at 25% for any of your charges etc?

Also what are your fees for returns please?

[Dbaca]

We can pay taxes to anyone in the EU but you need to pay the country's applicable VAT. We report to the Swedish tax authorities but we can pay and collect for any country. 

[Keith13]

We applied for an OSS registration in Ireland and was disapproved, telling us that the OSS scheme was for electronic/sales only and for the sale of physical goods and that IOSS (import) scheme is the appropriate scheme to use.

However, my understanding is that the IOSS scheme is only appropriate for goods with an intrinsic value of €150 or less. All the goods we are shipping have a value greater than €150. 

Can someone give me some insight as to  what is the appropriate scheme for a trader shipping physical goods into the EU from the UK where the value is greater than €150

[Dbaca]

Yes IOSS will be for just those shipments under 150€. Shipments above that will require classification, Duties, Taxes, and full clearance fees. If you are shipping from the EU to the EU you do not need to work in the IOSS. It only matters for products entering the EU from outside the Common Market. 

If you want to manage true DDP above €150 you certainly can use Crossborderit but it has different requirements. 

[Dbaca]

The crossborderit original solution was not for IOSS. We are doing true DDP so we pay the carrier. If you are interested in this reach me on our website. We are a little slammed with IOSS at the moment but this challenge is our core business. Contact me offline and our Shopify app which will be available soon covers this true DDP model.

[CafelatUK]

This IOSS is very confusing. Each country in EU has its own VAT rate. Also, how about duties? Do we need to charge customer's duties for less than €150 as well? For the shipment over €150, what if I want to do DDU which is less harassments for us. It makes everything so complicated now. 

[Dbaca]

IOSS will not require duties up to 150€ only taxes (VAT) This is actually a good thing because before you were paying Duties and VAT from around 22€ plus. So with IOSS there are not duties from 22€ to 150€ this helps your company it is more simple.

Duties are only going to be levied on items above 150€

I hope that helps

[CafelatUK]

How about freight charges then? Do I have to charge EU VAT on this as well? 

[SMU]

Registering is not mandatory for lower sales to the EU however having an IOSS will make the transaction and delivery far easier for customers, otherwise they will be hit with the VAT and any handling fee once their item arrives in their country and I can see this potentially resulting in many refusals and therefore returns. I think many UK merchants simply want to make the whole transaction as transparent and seamless as possible. We only sell a small quantity to the EU so we didn't need to register but personally I think it will make things far easier in the long run to have an IOSS and Royal Mail specifically ask for our IOSS number on their click and drop system so that this can be made visible of CN22 customs declarations.

[CafelatUK]

Yeah. Since Royal Mail is asking for this IOSS number, I think it's better to have one. I understand the customers will not be happy when they are being hit by the VAT and admin fees before receiving the parcel so trying to make things as clear as possible. 

[frasers]

Same here, I drop shipping from China, but starts from this week all of the Chinese logistic supplier stop accepting posts to EU unless you provide the IOSS number.

So far Crossborderit price seems reasonable but they don't have an address nor contact phone, not sure if it's a legit agent or not...

[Matt_Grech]

@frasers The contact details can be found in the IOSS Brochure which you can download.

[frasers]

Thanks a lot!

@Matt_Grech 

[Dbaca]

We are legit. We are in Stockholm. You can get me at [email protected] We would like people to go through the website as our customer service is overwhelmed. I am happy to answer questions via mail. 

[Christian48]

@Dbaca I'm trying to fill out the registration, yet an EIN number is required. As a UK company I don't have one of these, so what do I do? Do you want my VAT number instead?

[Dbaca]

Yes we can use your VAT,

[SarahFB]

Hi, 

I'm potentially hoping to use your services, however what do you do if you aren't VAT registered in the UK? I have an EORI number?

Thanks 🙂

[Dbaca]

We are really looking for your VAT or organization number. So we can identify your specific company
Thanks,

[SarahFB]

Hi

I'm not VAT registered in the UK as I don't need to be as my turnover is not high enough.  Company registration numbers are only issued to businesses that are registered at Companies House, such as limited companies and Limited Liability Partnerships (LLPs).  I am a sole trader and sole traders do not have company registration numbers because they are registered with HMRC, not Companies House.

I have an EORI number, this is a number required by a business to move goods between Great Britain and other countries.  It appears on all customs paperwork and is a way to identify the registered name and address of the business.  You can use this number to verify my business, surely? 

If you only accept VAT registration numbers and CRNs then you'll be putting another massive hurdle in the way of micro-businesses who always seem to be overlooked.

[Dbaca]

If you are a single yes use your EORI number.

[SarahFB]

Hi

Thank you for that, I will give it a go if/when I register.  I'm going to hold off for a month to see what solutions within the UK are offered and from Royal Mail but I really appreciate you taking the time to answer mine and everyone else's questions so quickly.  It does  make everything a little more reassuring.

[Dbaca]

You can use your company registration number. or VAT

[Dbaca]

Try with the EORI number. 

[frasers]

It's a must to fill in.

[Dbaca]

I did not realize that was mandatory.. So if you use Royal mail add that.  If you use FedEx.. it is not important if you change carriers this is just good information for us to know.

[frasers]

what you said here:

When you ship you can upload a csv file of your shipments, use our API or our Shopify extension (this is in beta)

So it means, when I ship, I download the csv file from your website and fill in the information, then upload to the website?

[Dbaca]

You can extract it from your shipping system. Then upload it to our system. 

[frasers]

Ok, clear!

Please let me know also how to pay the service?

[Dbaca]

You will recive an onboarding with PayPal and this is how we are paid. You tell us what you collected and we request it from the PayPal account.

[frasers]

Perfect.

Registered and waiting for the code to start! thanks a lot for your patience and explain.

[Foxxycarr]

Thank you for being on here, I have signed up to use you guys based on your presence here so again thank you.

[Max1957]

I am going to wait a few weeks to see what happens.  I am in no rush to sign up with a company offering intermediary services whose hastily put together website has absolutely no information about the company behind it, postal address, company registrations etc...  It may be totally legit but I am going to see what develops and crucially what Shopify starts promoting...

[frasers]

There's another thing I'm not quite sure, since we don't have EU VAT, how to remit the VAT to EU? Or crossborderit would collect this vat together with the post process fee by paypal, and remit on behalf of us?

[Dbaca]

Yes we will collect it via paypal and pay it for you.

[Home-Landing]

So, we received a letter (pdf) from the Swedish tax authorities showing us an iOS number. We haven't received any "Paypal onboarding" though. What next??

[Dbaca]

You should receive uploading instructions and can start to use your IOSS. We are working on some changes made by the payment provider and will have payment info soon. We have a little time with that so as long as you ship and upload you will be fine.

[Matt_Grech]

For UK-based businesses, yesterday there was an update on the gov.uk website regarding the EU commerce package: EU VAT e-commerce package - GOV.UK (www.gov.uk). They have now updated it with this paragraph: 

Goods are low value where they are in consignments with an intrinsic value not exceeding £135 (€150). Two new IT systems will be introduced – one for the collection of VAT on imports of low value consignments and the other for the collection of VAT on intra-EU Business to Consumer (B2C) transactions of goods. Both systems are designed to reduce administrative burdens on business and to facilitate the collection of VAT across the EU. Implementation of the EU’s e-commerce package is in accordance with the UK obligations under the Northern Ireland Protocol. 

So there may be hope yet with registering for IOSS thru HMRC.....

[frasers]

how long it will take in general to receive the code? I applied on 27th but it still says "We have recieved your request for an IOSS number and are working to get it ready for you as soon as possible. You will be notified when it's available."

[cetsatadmin]

@frasers did you apply for your IOSS number through the UK portal? struggling to find where you apply for one.

[Det742021]

You have to use an intermediary within the EU, we got ours in a day from Crossborder IT, you can find their details above in the same thread,
They are in Sweden, but they will deal with this for you

[frasers]

@Det742021 yes that's exactly what we are doing, filled their online forms but so far haven't got the IOSS code yet.

[Det742021]

You could email their advisor here on the forum, if you go to previous posts he was helping to others
Think called Dan

[cetsatadmin]

Can I ask why you decided on that route rather than waiting for HMRC's IOSS portal? (delayed portal)

[Det742021]

We cant run a business without this number, especially that some courier will not even allow you to their site without the IOSS number, ie DPD

There is no news about HMRC and knowing them will be months…, I tried to get IOSS number from the uk, nobody helped and at least these guys helped. KPMG and Deloitte wants 2500$ for a year to help, so no.
Fedex will charge 40-180USD for clearing fees if we send anything with their system, and we cant afford losing thousands of funds on fees, we already had a lot of problem since January due to all couriers and the brexit situation

[cetsatadmin]

@Det742021 thank you for a clear explanation. Much appreciated.  My clients are in the same boat, some have switched of EU sales due to the problems they have been having. I have found the cross border website now so I will check it out.  I had been looking at https://www.taxamo.com/taxamo-assure-rmg which is slightly different as you send through their IOSS number although it allows for customisations.