HI , I will try your questions one by one
Q:
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?
A:
No, you cannot treat your payments to Aliexpress as input that (VAT on the purchases) . 1. IOSS scheme does not allow any input VAT reimbursements. 2. VAT , technically , is always a national tax . so the only way you can treat payments to Aliexpress as input VAT if both of you are registered for VAT in a single EU country and supply happens in this country.
The only way to treat this “VAT” is to absorb it into the cost , because it is not VAT in all practical terms.
So the cost of the item is 60 EUR to you , net of VAT , You sell it for 100 EUR plus 20 EUR VAT, your revenue is 40 EUR . No other way to treat it.
Q:
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.
A:
Yes , but it is not even traceable to the EU authorities . Aliexpress will use their own IOSS number and at customs the item will be attributed to them, not to you. Moreover sooner or later the EU customs will realize that you pay VAT but there are no items coming through customs with your IOSS number. Most probably they will do nothing about it , but still .
Q:
And then, there are these questions as well:
- It’s said to be complicated to register as a seller on AliExpress and deliver through your OWN IOSS instead of AliExpress’s IOSS.
A:
One cannot register as aseller at ALiexpress , sell through them and use seller’s IOSS number. It should be the Aliexpress’s number if the Aliexpress’s checkout is used.
Q:
- It’s reportedly difficult to obtain accurate invoices from AliExpress, with the tax paid to AliExpress properly indicated.
A:
That I cannot help you with . They have an invoicing and settlement system for underlying suppliers , but in this case it would be the “dropshipper” who would be arranging for invoices. You are not Aliexpress’s seller. You are a buyer from them.
Q:
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.
A:
“Dropshipper” is not supposed to have the IOSS number at all - they are not in the process of the sale , at all. Even if some of them do register for IOSS they break the law.
And the last. DSERS , CJDropshipping and many others in most cases are not dropshippers at all. They do not have warehouses , they do not touch physicall packages, they do not own/order any transport . They provide SaaS service to connect a source of goods (real underlying suppliers or maerketpalces ) and you. They may do paperwork (issue invoices ) and transfer data , but they do not touch anything physicall.
Delivery in most cases is done by big delivery solution providers : SF express, China post ,Yanwen, YoTO etc etc etc. These real delivery companies never know anything about “dropshippers” for whom you think they work - delivery is ordered by Aliexpress or the underlying suppliers not the “dropshippers”.
These “dropshippers” sometimes even put tracking through their site , but tracking number is still the one that is obtained via OMP (Aliexpress etc) .
Dropshipper’s revenue is to sell you the app on monthly bases and percentage of the sales (for some of them) . No logistics or real goods handling .
Sorry to disappoint you 