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..
Topic summary
UK and non-EU e-commerce sellers face challenges implementing the EU’s new IOSS (Import One-Stop Shop) tax regime, effective July 1, 2021. The system requires charging destination country VAT rates on sales under €150, while sales above this threshold remain VAT-free until delivery.
Key Technical Issues:
- Shopify’s native functionality initially lacked proper €150 threshold implementation
- VAT must be applied only to orders under €150, but early implementations charged VAT on all orders or none
- Configuration requires adding IOSS number under Settings > Tax > EU > “Shipping to the EU” section (not within EU section)
- Debate exists whether shipping costs should include VAT in IOSS submissions
Registration Challenges:
- UK sellers cannot register directly with EU tax authorities due to lack of mutual assistance agreement
- Must use EU-based intermediaries (CrossBorderIT, Taxamo, EasyProject mentioned)
- Ireland rejected some UK applications; Sweden appears more accessible
- Registration fees and per-transaction costs vary significantly
Intermediary Solutions:
- CrossBorderIT offers IOSS number provision and Shopify app integration
- Concerns raised about their support responsiveness and unclear documentation
- Daily/weekly reporting requirements create manual workload
- Payment processing fees and multiple invoices increase costs
Current Status:
- Shopify eventually released IOSS functionality (April 2021)
- Royal Mail exploring DDP (Delivered Duty Paid) alternatives
- Some sellers avoiding IOSS registration, letting customers pay import fees
- EasyProject/Avalara mentioned as working solutions with automatic threshold handling
12 Likes
My read of the new tax rule is that it applies to ALL non-EU sellers, not just UK. I have the same question as Max1957 and am somewhat distressed to see that there has been no response to his/her question in a week. Here is the link to the IOSS page
6 Likes
Further thoughts and questions: The new EU VAT regime (July 1, 2021) will affect all B2C sellers – both EU and non-EU – who sell cross-border. And as Max1957, this only apply to sales less than EUR 150. I can see that Shopify will allow one to set up a specific tax rate for each country, but I don’t see a method to add VAT to only those orders from EU country X (at that country’s rate) that fall below EUR 150. It looks like all sales amounts will have tax added or no sales will have tax added. Can anyone address this? Also, “Any businesses selling less than €10,000 per annum cross-border on B2C goods and services will be exempt from the obligation to complete an OSS return. Instead, they will be able to charge their domestic VAT rate and report the sales below this threshold in their regular domestic VAT return.” Source: https://www.avalara.com/vatlive/en/vat-news/eu-2021-one-stop-shop-vat-return-for-e-commerce.html. Finally (for now), please share the names of any experts or companies with whom you have had a positive experience in r=deal with VAT issues.
7 Likes
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?
2 Likes
We are also in need of confirmation that the functionality will be implemented, so that VAT is only applied for EU orders under ÂŁ135 and there will be an easy way to extract the sales and payment data for these orders. Many thanks.
2 Likes
Agreed with all comments here and also in need of some information from Shopify on whether this functionality for order threshold on tax settings is in the pipeline. I assume EU IOSS is going to be used by a decent portion of Shopify’s users that would warrant addressing in some fashion.
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I have just send a series of emails with the IOSS PDF to shopify support, I would suggest that everyone does this so that they can take notice and start preparing
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I wrote to Customer Service and here, in part, is the reply:
… I can confirm our developers are working on changes to how Taxes will be applied once this change comes into effect. At this time, we don’t have additional information at this time about how exactly those changes will look once our developer team has completed them.
We do have a blog on our Shopify Blogs that contains some additional information, which you can check out here. [https://www.shopify.com/blog/eu-vat-changes-2021**]**
Please be assured that changes will be communicated to our merchants once our developers have determined how those changes will look in your Shopify Admin. You can always keep an eye on the Shopify Changelog, which announces all updates and feature rollouts on Shopify’s platform…
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July is fast approaching, so hoping to see an update soon…
Incidentally does anyone now how to register with the One Stop Shop? My sales to the EU exceeds the 10,000 euro threshold, so I guess I need to register somewhere, but I’m just going around in circles! All web searches say you can register from 1st April 2021, but don’t give a web address to go to.
2 Likes
Any updated information on this? Is Shopify not helping?
Christian - you can register on the Irish Government site…
One Stop Shop (OSS) and Import One Stop Shop (IOSS) Pre-Registration 1 April 2021 (revenue.ie)
I tried twice to register on the Irish site and have received this on 23rd April
Hi Dave
We are waiting confirmation on whether UK traders will need to use an intermediary to register for the Import Scheme.
We are advising UK traders to hold off applying for the Import scheme (via an intermediary) until we receive confirmation.
I will contact you as soon as I receive this.
Kind regards
Niamh
Niamh Maguire | IE VAT OSS | Office of the Revenue Commissioners, Personal Division, Louth District, Millennium Centre, Dundalk, Co. Louth, Ireland.
• +353-858586194 |•mossnsd@revenue.ie
1 Like
Dave, Interesting. I read the whole EU document regarding IOSS and I thought that it was pretty clear that an intermediary was NOT required - but maybe I was reading it solely from the perspective of my UK on-line business. I have held off registering until I understand what Shopify are going to do …
I know, Shopify released this in April https://www.shopify.com/blog/eu-vat-changes-2021
But the IOSS pages clearly states this: https://ec.europa.eu/taxation_customs/business/vat/ioss_en
This is what I received from support@shopify
|
Washington (Shopify) Apr 30, 2021, 13:34 EDT Hi Dave, Washington here from Shopify Support. Thank you for reaching out to us, and I’ll be helping Andy with emails today. To answer your IOSS tax system concern, while our Product team is aware of this, we do not currently have any public documentation. We won’t until we have a process in place. In the meantime, just as Andy mentioned we would recommend reaching out to your local Tax authority for more information about the changes. You can also check our Shopify Changelog - Click here for updates about this when it is available. If you need anything else, please feel free to reach out to us again. I’ll be more than glad to help you out whenever & wherever. Kind regards, |
1 Like
Thanks for the link Max1957. Having read what ShavingTimeDave has posted, I will hold off for now on applying.
It would seem that UK sellers, selling to the EU will be in the same position from 1st July as non-UK sellers, selling to the UK were on 1st Jan. I haven’t seen any functionality added to Shopify to help address the new VAT rules in relation to the supply of goods to the UK from the 1st Jan, so I’m not hopeful Shopify will be forthcoming with a solution for 1st July.
I have applied again and received the below email. I have also read here https://www.ukbusinessforums.co.uk/threads/eu-ioss-signup.412355/ that Royal Mail are going to be an intermediary for UK customers and I am requesting additional information from my RM Account Manager.
The details of an intermediary are here: https://www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part10-special-schemes/vat-ecommerce-rules-1-july-2021/vat-ecommerce-registration-for-the-OSS-and-IOSS-from-1-april-2021.pdf
1.4.3 What is an intermediary for the IOSS?
An intermediary is a person that has their business establishment or a fixed
establishment in the EU and represents a taxable person for the purpose of the IOSS.
If a person has no establishment in the EU, they cannot act as an intermediary.
To act as an intermediary, that person will first need to register as an intermediary
for the purpose of the scheme. The Member State of registration will be the
Member State where the intermediary is established. If the intermediary has not
established their business in the EU but has multiple fixed establishments in the EU,
the Member State of registration will be the Member State with a fixed
establishment where the intermediary indicates that they will make use of the
Tax and Duty Manual VAT eCommerce – Registration for the OSS and IOSS from 1 April 2021
8
scheme. The intermediary will be bound by this decision for the calendar year
concerned and the two calendar years following.
Upon registration, the intermediary will be allocated an intermediary identification
number. It is only once the intermediary is registered as such for the IOSS, that they
may register taxable persons that they have been appointed to represent. The
intermediary will receive a separate IOSS identification number for each person they
represent under the scheme.
Where an intermediary is appointed to represent a supplier under the IOSS, the
intermediary will have responsibility for the payment of the VAT due and the
fulfilment of the VAT obligations of the supplier under the scheme. Such obligations
include the filing of returns and record-keeping obligations.
A taxable person cannot appoint more than one intermediary to represent them at
the same time.
To register as an intermediary in Ireland, a person will first need to apply for a Tax
Advisory Identification Number (TAIN). Where an intermediary is registered here and
wants to register a taxable person for the IOSS, the intermediary and their client will
be required to complete and submit an IOSS intermediary link notification
Dear David,
I note that you have reapplied for the Union Oss Scheme. This application has been disapproved. You will receive an automated email seeking further clarification, please ignore this. As previously advised the IOSS scheme would be most suitable for your business. A non-EU business (UK included) must engage the services of an intermediary for the purposes of the IOSS scheme.
More information on the scheme and the role of the intermediary is available here
Kind Regards,
Rachel
Rachel Williams | IE VAT OSS | Office of the Revenue Commissioners, Personal Division, Louth District, Millennium Centre, Dundalk, Co. Louth, Ireland.
( +353-42-42179 |*ossnsd@revenue.ie
Hi @Max1957
Tiia here from the Better Reports support team.
I believe our app Better Reports may be able to help. While we are not able to manage how taxes are applied to an order, we can create sales reports that list our standard sales metrics including gross sales, net sales, and total sales by country (either shipping or billing country). We can also create reports that show sales grouped by “Is in the EU” or “Is not in the EU”.
Additionally, we can create reports that list all taxes that have been charged by order. These reports can be set up to show a summary by month or quarter and can also be scheduled to send your email or Google Drive at set frequencies (i.e. weekly/monthly/quarterly).
In addition to building custom reports to meet your specific needs, you’ll also get access to 60+ built-in reports that cover many common use cases for merchants and all of the reports can be directly exported to Excel, csv, or pdf.
I encourage you to install Better Reports and start your free 14-day trial, and I’ll be happy to set this up for you!
Hi @MarshallF ,
Tiia here from the Better Reports support team.
I believe our app Better Reports may be able to help. While we are not able to manage how taxes are applied to an order, we can create sales reports that list our standard sales metrics including gross sales, net sales, and total sales by country (either shipping or billing country). We can also create reports that show sales grouped by “Is in the EU” or “Is not in the EU”.
Additionally, we can create reports that list all taxes that have been charged by order. These reports can be set up to show a summary by month or quarter and can also be scheduled to send your email or Google Drive at set frequencies (i.e. weekly/monthly/quarterly).
In addition to building custom reports to meet your specific needs, you’ll also get access to 60+ built-in reports that cover many common use cases for merchants and all of the reports can be directly exported to Excel, csv, or pdf.
I encourage you to install Better Reports and start your free 14-day trial, and I’ll be happy to set this up for you!
SamosEcommerce - thanks for the information. It appears that you are UK
based. Can you/do you work with companies based in the US (or, for the
benefit of other readers, any non-UK country) on the EU VAT scheme
described in the article?
Thanks.
MarshallF
It looks like the .gov website has been updated -
https://www.gov.uk/government/publications/eu-e-commerce-package/eu-vat-e-commerce-package
Interestingly it mentions a UK portal, but it might not be ready by the 1st July
“A business not established in the EU or Northern Ireland wishing to register for IOSS will be able to do so in any EU member state or in the UK.“