When selling on your website, and someone buys an item who lives in Europe it can come through saying they have paid tax and this money ends up in my account. How as a seller, am I meant to deal with this? How do I remit that tax to the relevant country’s authorities or don’t people bother doing that? I just don’t want to end up with a massive tax bill somehow! I am talking about Europe here, NOT USA as I have already suspended sales to that country.
Hi there, What you need to do is get an IOSS number first. You then put this on your Royal Mail customs declarations so that when the package arrives in the EU destination, no further import taxes are applied and the package will be delivered to the customer without hindrance.
To obtain an IOSS number, we use a company called Cross Border VAT (https://www.crossbordervat.com/) and we pay an annual fee for the IOSS number which allows us to dispatch up to 20 EU orders per month. Over this amount, you move up to the next level.
Cross Border handles all the IOSS registration and they bill you once a month for the tax you have collected and remit this back to the relevant authority.
Cross Border has a Shopify app which collates the amount of tax collected from all the EU transactions, so you don’t have to do anything, except go through the invoice at the end of each month and make sure its all OK.
They are extremely helpful and this is a very cost effective way to start shipping to the EU and collecting the taxes at checkout.
Hope that helps!
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When selling to EU customers through your website, Shopify may collect VAT at checkout if VAT collection is enabled and required under local laws. This typically applies to orders under certain thresholds or in EU countries where Shopify supports VAT calculation.
That said, as the seller, you are still responsible for remitting the VAT to the appropriate EU tax authorities.
If your total sales to the EU exceed €10,000 per year, you are required to register for VAT in the EU, usually through the One-Stop Shop (OSS) scheme. This simplifies VAT reporting across multiple countries.
It is important to consult with a tax advisor who understands EU VAT rules. Many sellers use automated tools that integrate with Shopify to track and manage VAT obligations. Keep in mind that collecting VAT at checkout is only one part of compliance. You are still required to file returns and remit the tax you collect.
And yes, what you mentioned is correct. If VAT is not handled properly, customs can hold packages, charge your customers VAT again along with handling fees, and this can result in chargebacks, poor customer experiences, and harm to your business in the EU market.
Hope this helps clarify things.
This is a good question, and a lot of sellers run into the same confusion with EU tax rules. Usually, if the tax is collected at checkout and ends up in your account, you’re responsible for remitting it to the relevant EU tax authority unless you’re using something like Shopify’s automated tax/VAT system. It might be worth checking Shopify’s VAT guides or consulting an accountant familiar with EU sales tax to avoid surprises later.
Many thanks! As I am not registered for VAT though my accountant says I do not need to bother dealing with the tax from European buyers.
As been said before, just stay below the threshold and you are fine.
It’s quite easy to manage in the end, just take all your orders and filter by county. But I can imagine it does look overwhelming.
Hi,
Your accountant is correct. You don’t need to register for VAT in EU if you fulfill everything from UK to EU. However it is not a good practice to collect the VAT from EU customers and then letting the customer to pay the VAT at delivery to customs anyway.
IOSS is something you should definitely look into, if the order values are generally below 150€. There is literally no reason not to register for IOSS if you have even a tiny customer base in EU.
We have a good article on IOSS benefits on our help center: https://help.easproject.com/hc/en-gb/articles/5024159296031-IOSS-isn-t-mandatory-but-here-s-why-it-s-mandatory-for-your-EU-customers-and-your-store
You can find our app in Shopify app store: EAS EU & UK Compliance - Automate your EU & UK Compliance (IOSS, GPSR, OSS and... | Shopify App Store