Does AliExpress handle IOSS and VAT for dropshipping in the EU and USA?

Product Development & Sourcing
7

Rostislav, thank you for your valuable thoughts.

"But in your situation (you sell through your own Shopify store) it is you who make the sale , it is you who collect the money and it is you, who are responsible for the VAT. Aliexpress acts, in essence , as your underlying supplier and they do not use their checkout.
Aliexpress sell the item to you at 50 EUR (let us put away inclusion of VAT in that price for the time being) . If , as DSERS claims it, Aliexpress will pay VAT on the sale , how they would know you retail price (that being 100 EUR) ?
If , as it is claimed, that is the case and Aliexpress pays 10 EUR VAT , then you (yes, you) underpaid VAT to EU…"

Absolutely right!
I completely agree with you on this one! Because that’s exactly the thought I had:
I am indeed selling the product at a higher price than AliExpress, which would result in higher taxes.

However, AliExpress still charges the tax. How should I handle these expenses?

:thinking: Okay, summing it all up - am I understanding it correctly (I would really appreciate your opinion on this):

Ultimately, what matters is the final sale (B2C). I understand that part.

So, the customer orders from me (item for €100, I collect tax, 20% = €20).
I order the item from AliExpress (item for €50, AliExpress charges 20% = €10 tax).
The transaction between AliExpress and me is a B2B action.

I report the tax revenue of my shop-sale using MY IOSS number to the EU - and the EU receives €20 (not €10).

And the tax I paid to AliExpress: Can I declare it in my tax return and offset it as an expense or input tax credit? :scroll:

Would that be mostly correct then?

There’s just one cosmetic issue remaining:

If AliExpress indeed forwards its share of the tax to the EU (or any other country) - then the EU is being paid twice.

And then, there are these questions as well:

  1. It’s said to be complicated to register as a seller on AliExpress and deliver through your OWN IOSS instead of AliExpress’s IOSS.

  2. It’s reportedly difficult to obtain accurate invoices from AliExpress, with the tax paid to AliExpress properly indicated.

Unfortunately, AliExpress doesn’t make the process easy, it seems (to do everything correct).

That’s why many dropshippers proceed like this:

First, they use AliExpress’s IOSS for delivery - even though, as you correctly pointed out, that doesn’t seem to be entirely correct.
Once a product sells well, they collaborate with an agent who now organizes deliveries through the dropshipper’s own IOSS.