Shopify Advanced - Taxes and Duties FEEDBACK needed from people using this feature

Shopify Discussion
1

I am in the UK and selling into the EU is now difficult after BREXIT.

In order to sell into the EU without the user paying taxes on import, I would need to collect taxes at source and send to the destination country using an IOSS number. Other platforms offer solutions for this such as collecting taxes and duties for you and sending them to the destination country on your behalf and you can use their IOSS number on the package when you ship.

I had understood that this is what the ‘taxes and duties’ feature was on Shopify Advanced. The agent on the help chat says that this is not what the feature does, that I would still need to send the tax to the destination country myself and would still need an IOSS number to sell into the EU.

Can anyone using Shopify Advanced please give me some feedback on using the taxes and duties feature, especially if they are based in the UK and ship into the EU.

Alternatively, can anyone in the UK tell me if they have managed to work out how to collect taxes at the point of sale and pay them to the EU in any sort of practical and economical way.

Thanks

2

I keep getting told by agent that it is the responsibility of the merchant to pay any applicable taxes.

I am not in disagreement, however other platforms facilitate this on behalf of the merchant.

For example, from Etsy:

Who: Non-EU sellers that deliver into the EU

When: 1st July 2021

Due to new European Union tax rules, Etsy will collect import VAT on physical goods under 150 EUR that are delivered to the EU from an outside country. This VAT will be automatically collected from the buyer at the time of purchase, then sent to local tax authorities on your behalf.

3

There is a simple answer to Etsy et al collecting and handling the VAT issue: the new regulation (1.July 2021) not only introduced new VAT schemes (OSS, IOSS and non-Union), it also changed the VAT liable parties. Simplified, a non-EU company selling through a marketplace, which are referred to as electronic interfaces, facilitate the sale and are therefore liable instead of the seller. The whole goal has been to make collection of VAT possible, through that lens the new regulation actually makes sense.

Until it doesn’t. Facilitating sales is not defined anywhere but is interpreted to mean commonly accepted marketplaces. It could mean also anyone whose name appears on the invoice, which would mean companies such as Klarna could bear the responsibility. Or a logistics operator can claim to facilitate sales. This will surely be tested in courts. In case of Shopify, they are really borderline and could be one day determined to be a marketplace. With the current misuse of IOSS, it is a responsibility I can’t imagine anyone would willingly take.

So yes, If you are selling through your Shopify (or woo or magento) store you are liable for VAT compliance in EU. The good thing is that the new regulation is easy to handle with the right tools. Which also make your life easier in many other ways also, better customer service, reduced costs and better sleep for you.

Here is ours:

https://apps.shopify.com/eas-eu-compliance

You can also book a meeting to get EU VAT straight:

https://meetings.hubspot.com/robert662/30-min-demo

4

Well the answer from the agent both correct and incorrect and it needs further calification. People in this trhread already discussed IOSS and the role of the marketplace. Shopify is not a Marketplace like Etsy or Amazon , it is a technology platform , and they will not involve themselves in the customs clearence process and paying for it, it is up to you and your delivery logistics chain to handle the customs clearence.

Advanced shopify does provide a possibility for a full landed cost and it does work along with IOSS. If the sale is below intrinsic threshold of 150 EUR you order will be calculated as IOSS meaning that only VAT will be addedd to the combined price of merchandise and the shipping fee , and provided that you set up IOSS scheme in your “Taxes and duties section”. For the calculation see the example below:

For inclusive pricing with delivery to France (20 percent VAT rate)

50 EUR (merchandise cost) + 10 EUR (delievery fee) will render 10 EUR of VAT ( 20 percent incusive VAT). Total order 60 EUR

For exclusive pricing with delivery to France (20 percent VAT rate)

50 EUR (merchandise cost) + 10 EUR (delievery fee) will render 12 EUR of VAT ( 20 percent exclusive VAT). Total order 72 EUR

So there will be no customs duties , since you use a simplification IOSS scheme .

If the overall intrinsic value of the order goes above 150 EUR you will have and option of full landed cost calculation by Shopify.

Note that the calulation by Shopify will be done based on exclusive pricing (i.e. the UK VAT will be taken off the merch before the calculation is done) if if your catalog prices are VAT inclusive , see the example :

Inclusive merchandise price 500 EUR , delivery to France (20 percent VAT )

(416,67 (merchandise without UK VAT) + 8.33 (shipping without VAT)*1,14 (customs duties# ) * 1.2 (French VAT)= 581.41 EUR

#customs duties may vary and will depend on the HS code that you assign for your merc, 14 percent here is an example, it could go up to 25 percent.

Thus, technically, you will be able to use both IOSS and DDP. Of course in both cases it is just the landed cost that is calculated by Shopify. You still have to pass your IOSS number to your delivery agent for IOSS deliveries and you will have to arrange delivery for DDP via some service like DHL, DPD etc.

Calculation made by Shopify might not be final and is limited to infromation you provide (HS code and the country of origin) , but within these parametrs national EU customs may require other supportive documents (certificate of origin , name of the producer etc.) and may change the customs duties during customs clearence process. Also remember that most courier services charge additional fees for customs clearence process and you should be very careful when you set rates for DDP deliveries (try to use some dynamic shipping rate solution).

Our solution can provide you with IOSS service and we can help you to set up the Advanced Shopify DDP solution, see us at www.easproject.com

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