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

Max1957
Excursionist
25 0 26

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..

Replies 360 (360)
tabishh837
New Member
8 0 0

I too have been asked to look into this for our ecommerce store. 

I have all the same questions as Max & Marshall. 

Would there happen to be an help on this?

 

jestsanti
Tourist
4 0 4

According to the source posted below, we are not REQUIRED to collect EU Taxes, it is more of a courtesy so our customers do not have to pay them themselves (like they always did). Since we are based in the USA with no stock stored in the EU, we have chosen not to register, our customers are used to paying the taxes, they know that and it is indicated at checkout on our website:

"It is optional but when a company is IOSS registered it must comply with IOSS rules. IOSS will enable non-EU sellers to register in just one EU Member State to centralize their VAT declaration and payments for all EU-bound shipments. If you decide not to declare the VAT centrally, the Member State of consumption (the destination country in the EU) will become responsible for collecting VAT on the goods. If you are not registered for the IOSS scheme and are not using any customs prepaid solutions, any import tax and customs duties in the EU country of destination will be charged to the EU shopper upon delivery of the goods. This would considerably impact the shopping experience for your customers based in the EU. For businesses outside of the EU, it is advisable to register under IOSS and appointing an EU-established intermediary to fulfil their VAT obligations under the IOSS scheme, unless the seller’s country has signed the VAT mutual assistance agreement with the EU (only Norway at the time of writing)."
My source is: Asendia, they won´t let me post the link here, but will post a screenshot.
 
So, we are actually NOT required to collect VAT Taxes in EU Countries (yes in the UK), it is optional. Here is the source: https://www.asendia.com/all-you-need-to-know-about-ioss-and-vat-rules
 
 
Max1957
Excursionist
25 0 26

I agree totally. I am a small business based in the U.K. that sells physical product worldwide with orders ranging from a few £/Euro to a few hundred £/€.  This is one of the reasons that I started this whole discussion. Despite having researched widely, One thing that I understood for the first time yesterday is that the U.K. DOES NOT have a mutual assistance agreement with the EU and therefore U.K. sellers must use an intermediary. This really complicates things for Shopify sellers. I use Royal Mail Click n Drop for postal service and the Shopify to Click n Drop integration is key to my business. How all of this is going to work in an IOSS scenario is a mystery to me. The Royal Mail advice is dubious, but alludes to future solutions. If anyone can shed any light on this please do. 

SarahFB
Excursionist
25 0 12

I'm in exactly the same boat, selling similar values and using Royal Mail Click & Drop. I'll keep waiting to hear more. I may have to temporarily stop EU sales or send DDU. 

I'm a sole trader, not registered for VAT in the UK as in nowhere near the threshold and I'm unsure accessing the IOSS means I'd have to register for VAT here too. 

Bibico_Admin
Shopify Partner
30 0 10

I recently found this company who  allow you to use their ioss number which means you don't have to register yourself and pay high reg fees. They charge per packet like taxamo but seem cheaper and the customer service is much more responsive.

https://www.crossborderit.com/ioss

I have not tested them out yet as I am still waiting to see if there are any last minute changes but they maybe a good low option to start with. If new options appear in the coming months at least you have not invested alot of money upfront.

 

 

 

SarahFB
Excursionist
25 0 12

Thanks, that looks interesting for sure.  Like you I am holding off signing up to anything in case anything is made clearer/easier for those of us in the UK.  It would be so much easier if we were permitted to access IOSS without using an intermediary.

SarahFB
Excursionist
25 0 12

Hi

Thanks for your input.  I just don't know what to do for the best right now, except suspend shipping orders to the EU until I've found the best solution for my business. 

I'm a sole-trader, there is no way I send more than 60 parcels a month to the EU.  This year to date I have only sent about 50 to the EU. Last year I sent 150 in total.  In the run up to Brexit I had a lot more orders from the EU.  My main custom is from UK, USA, Canada and Australia with Germany being the most consistent country sold to in the EU by a mile.

I am not familiar with dealing with VAT returns as I'm not VAT registered in the UK, my turnover is nowhere near enough and I can't find reference anywhere to whether a non-UK VAT registered business will have to register for UK VAT to submit EU taxes??! I don't want to risk sending parcels DDU as I am sure it will be a shocking experience for the customer with long delays and not knowing what the local postal service handling fee will be. In the UK it's £8 but I have heard some horror stories about huge fees for handling parcels in the EU.

I send all my parcels via Royal Mail Click and Drop, printing my own postage and customs labels.  Royal Mail are working on a DDP scheme but it's still under trial and won't be ready before the deadline of 1st July and I imagine it will be expensive.  I used to sell wholesale to some EU countries, mainly Germany, so I will have to use DDP for those wholesale orders above 150 Euro.

Foxxycarr
Tourist
6 0 2

Hi all, newbie here in the same boat as most of you.

One question I have before I rush out and sign up for anything in EU would be does the UK Limited Liability status for your company (if you are Ltd) stay in place legally if signing up in an EU country or do you all of a sudden become personally liable?

Dbaca
Pathfinder
166 0 42

We offer an interesting version of this service, IOSS for a flat fee.  It is 1 Euro per transaction so it is easy to pass onto the customer. https://www.crossborderit.com/ioss if you want to learn more.

Matt_Grech
Excursionist
18 0 11

@Dbaca Hello, we have actually filled in the online form requesting a demo but no one has got back to us yet (this was 10 days ago). What is not clear from your site is whether Crossborderit submits the monthly VAT returns too. We really would like further information on this service, especially since it seems to integrate seamlessly with the Shopify platform.

Thank you.

frasers
Tourist
24 0 2

Exactly the same I want to ask.

@Matt_Grech @Dbaca 

frasers
Tourist
24 0 2

just received a follow up from them, says:

. You will sign up your company and receive a private link
. You will then sign up for IOSS and receive it within 3-7 days
. You will receive access to our system.
. You will need to calculate VAT in your checkout
. There is a 3-month minimum of subscription fee of 19.99eur/month
. You will receive a PayPal driven account for billing in the next week.
. You will upload your daily shipping into our platform or integrate our API (this can be done in the future)
. Payments are dropped into the PayPal account
. We handle the rest- compliance, reporting etc.  You can track in our platform.

 

So it's not just 1 EUR per post, they still charge the subscription fee.

@Matt_Grech @Dbaca 

Dbaca
Pathfinder
166 0 42

Yes we have a small subscription free. We need to file all the reports and manage compliance. This is what the fee is for. The one Euro is designed to make the price easy to pass on to your customers who will be paying the taxes and fees. 

It is important to understand that many companies are approaching this as a tax compliance problem. It is actually more of a clearance issue. Our system is designed to manage it in that fashion.

Dbaca
Pathfinder
166 0 42
Yes we do all the reporting and filing. If you have questions you can email me.. I am happy to help. Our solution is a complete solution.

Dan_Nistor
Shopify Partner
41 1 8

Dan here from Vevol Media - Shopify Experts, I'll explain what we did for one of our clients based in the UK and how we helped them regarding the price displaying issue. 

We've added a dropdown on their Home Page that allows the visitors to switch between seeing the prices with VAT and without VAT. See attached file.

This has to be done by editing your theme's code. Feel free to get in touch with us if you need help on this.

Dan_Nistor_0-1628360770916.png


I hope this helps some of you! Best wishes 🖐

 

Dan from Vevol Media - Shopify Partners Since 2018
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Rosemary_MYndM
Tourist
3 0 1

This looks interesting @Dan_Nistor . How much would it cost to add this to the shop theme?

 

Also any update on the crossborderIT Spotify plugin? Has it been approved? @Dbaca 

Dan_Nistor
Shopify Partner
41 1 8

Hi @Rosemary_MYndM , depends on a few factors, like the apps you are useing, theme, theme's code. Happy to give you a quote and discuss more. Feel free to email me at: hello@vevolmedia .com Thanks!

Dan from Vevol Media - Shopify Partners Since 2018
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Det742021
Pathfinder
83 1 26
I can recommend Vevol Media, they down this for us and we are very happy with the results.
www.silverprint.co.uk

Dbaca
Pathfinder
166 0 42

Crossborderit charges €1 per shipment and $24 per month for access to our platform. ( + payment processing fees – depending on payment method)

To get you started with Crossborderit IOSS services, please follow the steps below:

Step 1: Add the Crossborderit app on Shopify APP store: IOSS and Landed Cost Service | Shopify App Store

Step 2: Register/ complete the registration for IOSS service on our site; https://cbit.crossborderit.com/merchant-onboarding

Step 3: When completed both applications/ registrations, you will receive an invoice from Crossborderit with 3 months pre-payment for the IM number (IOSS number) application to the Swedish Tax Agency.

Step 4: When 3 months subscription payment has been paid, Crossborderit will apply for the IM number at the Swedish Tax Agency, where you are registered.( please allow 3-5 business days)

I’ve attached here a file that can help you sign up easily.

We will manage the rest from compliance and  reporting.

You will soon receive more information about our payment solutions and onboarding form for payment options.

 

 

Pauline_Millwar
Tourist
10 0 9

Hi ,

It is great to see you guys have created an app for Shopify.🙂

Please can you elaborate on "( + payment processing fees – depending on payment method)"? 

We use Shopify's Payment gateway + Paypal to collect payment, which if we have understood correctly we would need to pass the relevant VAT amount to you. Are you going to charge us for sending you the VAT payment?????? Sorry its been a long day, but we can't see how we can afford this if you are going to charge a monthly fee + per shipment fee + a fee on the money we pass to you (which you ultimately pass to the authorities).

Many thanks

Pauline

Dbaca
Pathfinder
166 0 42
We are working on several payment systems, One is direct credit card, one uses PayPal Brain Tree. These are still in the making. We are also working to get Shopify to accept VAT payments directly.
At the moment we invoice customers VAT and Fees outside of the APP however the payment will be displayed there and you can collect it. We just need to bill you weekly after the fact. This is the last piece of automation we are working on.
I hope that answered your question.

Pauline_Millwar
Tourist
10 0 9

Hi Dbaca,

Thank you for your swift response. No not really.  As far as I can see we will be paying for:

1) the app (to you)
2) shipment (to you)
3) stripe fees (to shopify) or paypal fees (to paypal)
4) payment fees (to you) for the VAT part of the payment

Can you please confirm if we have understood correctly? and if yes for point 4) is there anyway we can negate these fees ie pay via bank transfer? or which one has the least percentage charge and what charge is it?

Christian48
Excursionist
19 0 14

@Pauline_Millwar I have issues with the payment system too. I signed up as soon as I could to CBIT, but the fees are beginning to stack up. Everything seems to be on separate invoices. The 3 monthly fee was on one invoice, the €1 fee per transaction is on another invoice and then the VAT invoice is on yet again another one. Now when a UK bank charges £15 to make an international transfer, that's £45 to start, just on those 3 invoices. Not to mention that the €1 fee per transaction invoices and VAT invoices are payable weekly, the bank transfer fees make this unviable going forward unless a new payment system is introduced.

Det742021
Pathfinder
83 1 26
Hello

If you use transferwise or now wise you pay peanuts.
Wise is brilliant, we use them in our business for many years, and we can transfer to any country in any currency wihin minutes and not to mentione it is like 1£ not 45£,
Just if you want to save money:D
Christian48
Excursionist
19 0 14

Hi @Det742021 That sounds more like it - thank you very much, I'll look into that 🙂

Det742021
Pathfinder
83 1 26
No problems, they are really good, we saved so much money
Littleowh
New Member
6 0 0

I'm also having some problems with payments with Europe

Dbaca
Pathfinder
166 0 42
We have some simpler invoicing coming very soon. We cannot mix VAT funds with the fees. We are working hard to get more options.

Walop893
Visitor
1 0 0

We also are in want of confirmation that the functionality might be carried out, in order that VAT is best appliedhere for EU orders under one hundred twenty$ and there might be an smooth way to extract the income and fee information for these orders.

Dbaca
Pathfinder
166 0 42
Our app works well for collecting the data. We invoice VAT and fees at this point but have expanded functionality on the way.

PEZ
Tourist
11 0 2

I have registered for IOSS in France via avalara, ioss number is in shopify but vat is still being applied on orders to EU over £130 or 150 euro? 

Also I can't get info on how to get shopify to output all the data I need for the VAT return?  

is there even anyone monitoring this thread?

Miyafiya
Visitor
3 0 0

Hi PEZ,
I too have difficulties with the IOSS and Shopify. Where in Shopify were you able to add your IOSS ID number? My company is located in EU but my warehouse is outside of EU, so it seems like Shopify doesn't support IOSS for customers like me. So how did  you manage to make it work? Also, I was told that there is no way to create a threshold to only charge VAT on orders less than 150€.

PEZ
Tourist
11 0 2

Hi there,

You can input your IOSS into Shopify now, once done the 150 Euro threshold works and ignores taking vat payments when over the limit. 

Go into setting, taxes, European Union, VAT on sales to the EU (but then we are located outside of the EU) you may want to check with shopify support for what you should do.

For IOSS reporting I recommend Sheet Master, its a free APP that can generate reports you can migrate into your vat template every month. 

hope this helps, Pez

Miyafiya
Visitor
3 0 0

Hi there, 

Thank you for your swift reply. Unfortunately I can't seem to register an IOSS as I am already based in the EU 😞 I found this on Shopify's help center: "If you're located in the EU or you collect VAT on sales within the EU, then collecting VAT when you...

ot sure how to get around this...hopefully they will change it in the future, although I would like to have it now now. 😛 
Thanks for the app recommendation! I'll check it out 🙂

,Miyafiya

PEZ
Tourist
11 0 2

Hi Miyafiya

If you are fulfilling from outside of the EU then that's a different issue yes, not sure if its OSS you need rather than IOSS but you could speak to Avalara who are tax specialists.

good luck, it was difficult enough without your predicament (

Dbaca
Pathfinder
166 0 42
IOSS is for goods under € 150 OSS is for Digital Materials

##- Please type your reply above this line
PEZ
Tourist
11 0 2

OSS is for businesses located inside the EU IOSS is outside

https://www.quaderno.io/blog/oss-or-ioss-eu-vat-one-stop-shop-rules-for-e-commerce

It is not for digital goods only

ArdiG
New Member
8 0 0

@PEZ  OSS has two different schemes called the union scheme and non-Union scheme. Union Scheme OSS is for the goods and as you mentioned you are aware of it is for the EU sellers only. However, the Non-union scheme OSS is for digital services and goods, like ebooks or some online courses (you can find the full list here: https://www.emta.ee/eng/business-client/income-expenses-supply-profit/overview-charging-value-added-...). The difference is the latter is for non-EU sellers who sell digital products and services to the EU customers. Despite the Union scheme, you can register for VAT and OSS for Non-union schemes in any 27-EU state. 

Finally, If you are located outside the EU and you sell some online services or digital products to the EU clients you still can use the OSS scheme to pay your vat return for all your EU sales in only one state. 

 

ArdiG
New Member
8 0 0

Important update from HMRC for all UK merchants that sell to North Ireland using the #IOSS scheme:

Tell HMRC you’re registered for the VAT Import One Stop Shop in the EU

If you're registered for the VAT Import One Stop Shop (IOSS) in the EU and sell eligible low-value goods into Northern Ireland, use this service to tell HMRC your IOSS number.
👇👇👇
https://lnkd.in/ek6w4Hg

Emilie_Jalie
Excursionist
19 0 7

And Shopify does not allow the application of VAT based on variant or "non-physical" attribute....

 

This is quite a nightmare.

PEZ
Tourist
11 0 2
I use a VAT app to get around this
Emilie_Jalie
Excursionist
19 0 7
Which one?
ArdiG
New Member
8 0 0

Hello PEZ, 

We developed an application specifically for IOSS. Eurora also is the first EU IOSS intermediary. 

If you are interested we are looking for some volunteers to test our Shopify APP for IOSS. This will help you to automate all your VAT reporting and calculation for correct VAT % so it will be fully automated with no excel upload or manual reporting. If you are interested please write to ioss@eurora.com and our team will give you further information. 

PEZ
Tourist
11 0 2

thx for this but sadly all too late to the party as I registered for IOSS with Avalara and use apps for the rest, still waiting on shopify to make reporting easier and more affordable on lower tiers......

ArdiG
New Member
8 0 0

Hello Emilie, 

We developed an application specifically for IOSS. Eurora also is the first EU IOSS intermediary. 

If you are interested we are looking for some volunteers to test our Shopify APP for IOSS. This will help you to automate all your VAT reporting and calculation for correct VAT % so it will be fully automated with no excel upload or manual reporting. If you are interested please write to ioss@eurora.com and our team will give you further information. 

Dbaca
Pathfinder
166 0 42
Crossborderit still has all of these options. We had some complaints early on about our billing. It was a bit complicated to be compliant. We now have very strong solutions and a very easy experience. I am happy to discuss as well if anyone has questions.
London_Loves_Be
Tourist
7 0 2

@Dbaca 

Could you please advise how we get in touch with your company as we have sent 17 emails to date and countless phone calls to your San Diego "office" (619 704 2321) without any luck over a 2 month period!

You have called us once about 10 mins ago and all I could hear was a child crying and a dog barking in the background which oddly is the same thing you hear when you call the above number and have been transferred to the "operator". Your phone number sounds all very professional to start with asking if you know the extension of the party you are after but then goes downhill rapidly once you are transferred to the "operator".

This company appears to be a one-person operation that is overwhelmed.

You have sent us an email informing us that you will cancel our IOSS sub within 3 days unless you hear from us as you haven't already, 17 emails, countless phone calls what else can I do apart from buy a plane ticket and see you in person or use a very athletic carrier pigeon to fly from the UK to California... may take longer than 3 days though but will still be quicker than waiting for you guys to call or email us back it would appear?!

 

Please advise what we should do???

Miyafiya
Visitor
3 0 0

Thank you PEZ.
It is indeed IOSS I need as I am fulfilling from outside of EU. But the feature is not supported on Shopify it seems as my company is registered within EU. 😞 

Many thanks for your tip on the tax specialists! I will look it up 🙂


ArdiG
New Member
8 0 0

Hello, 

It doesn't matter if you are located in the EU or not. IOSS is needed when your goods dispatch from non-EU countries.

I am happy to explain to you the difference between IOSS and OSS, and what are the solutions.

You can send your question to my email ardi.ghorbani@eurora.com 

Best, 

Ardi

PEZ
Tourist
11 0 2

ArdiG 

I am well aware of IOSS and OSS differences thanks. You can only register for OSS if you are within the EU but we are in UK and use IOSS. We also have a solution to my question which was regarding reporting software.