EU Import One Stop Shop (IOSS) support

Max1957
Excursionist
25 0 26

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..

Replies 360 (360)
Det742021
Pathfinder
83 1 26
Maybe just use Royal mail, that is simple and see what happens.
Many people are not aware of the rules, or Brexit and it is a shock when they get the fees…
We lost many customers.
Dbaca
Pathfinder
166 0 42
Crossborderit has a Duties and tax service above €150 globally as well to get rid of this float that many carriers use.
Dbaca
Pathfinder
166 0 42
We do offer another service outside of the IOSS for above €150.
Dbaca
Pathfinder
166 0 42

You only need to register for one country and the intermediary handles all others.

Dbaca
Pathfinder
166 0 42
Send me a mail at info@crossborderit.com and we can arrange a chat.
London_Loves_Be
Tourist
7 0 2

@Dbaca Can you please advise when uploading to you guys do we put the Gross price our customer has paid which includes the applicable VAT rate or the NET price (excluding VAT)?

I ask as I have been stung before when we were told to put the Gross total of the order then it got presented to Customs by the courier and they then added VAT on again to the Gross price thus two lots of VAT added to the order.

Curb_Wear
Excursionist
14 0 17

The figure you enter in the 'sales amount' column excludes VAT. 

Crossborderit are requesting for amounts to be in EURO but we charge in POUNDS. Not sure how this is accounted for?

Dbaca
Pathfinder
166 0 42
It is up to the customer to perform the conversion of currency before they report it to us in the upload. We will relay that it is the accurate conversion for that date.
AnyDevil
Excursionist
20 0 8

is there any possibility that our delivery can be rejected or more tax added (resulting in fees for the customer) if the customs looks at the Euro data we gave you and the GBP data we sold the item with, and they decide they don’t match?

Because Royal Mail is submitting the electronic data in GBP and you are submitting in EUR, so there’s going to be a discrepancy.

Dbaca
Pathfinder
166 0 42
This is a question we do not know yet but if you convert on the day of the shipment we will defend the amount and believe it will be fine.
Some things are just ambiguous at the moment.



AnyDevil
Excursionist
20 0 8

Hi Damon, I'm trying to complete the CSV but I'm struggling. Earlier I asked a question about vat on the shipping amount and you mentioned:

"I am not sure how Shopify is handing this but IOSS demands VAT just on the product"

Indeed, on the Royal Mail labels it does NOT display mention the shipping amount on the shipping label (perhaps they do upload it into the electronic information, I don't know).

However, on Shopify and on Amazon, they ARE adding VAT on the postal amount, so it would suggest it does need to be submitted and someone else advised me in this thread that vat is chargeable on postal costs.  So there areconflicting realities here. Can you help demystify this?

If we only provide the product cost to IOSS, is there, therefore, a very real chance that our customers will be charged import fees due to the missing shipping VAT?  Because surely this VAT is due to the recipient country and not the UK?

Dbaca
Pathfinder
166 0 42
These other platforms may be doing it but you do not have to. They probably are just not doing it right at the moment. Contact support@crossborderit.com for help on the CSV file. The Shopify app will be out very soon.
Thank you,
Damon
AnyDevil
Excursionist
20 0 8
  1. Hi Damon, please can you help to clear up all this confusion?

e.g.

- To where are we supposed to pay the vat on the shipping if it’s not via IOSS? ..And you are confident that that if we don’t add the shipping value or vat to your upload file it will not result in the customer receiving a payment request notice?

- There are some comments here about the sample upload file not working. I didn't get that far yet because I’m scared to upload the wrong information.

- Is there a section on your website where it explains the requirements for each column in the CSV?  There’s too much unknown here. For example… In the sample csv some columns have the value “0” or are blank, and I don’t understand what the columns are actually relating to. For the transaction date, is that the date of the sale or the date of the shipping label purchase, as that is also a transaction?

Thanks

Dbaca
Pathfinder
166 0 42
The IOSS rules are different than the VAT rules and does not require you to collect VAT on shipping. I have a Swedish document that states that but I am going to translate it and get it on the forum.

The most common error people are having with uploading is the date format. The tax authority wants it to be in Year, Month, Day. This has caused a lot of confusion as this is not the standard in every country.

We have directions for the CSV file and our FAQs should be uploading all the questions.
Dbaca
Pathfinder
166 0 42

Definitions and main customs concepts 1.3.1. Intrinsic value

 

The new VAT rules for e-commerce have introduced special schemes for the calculation of the import VAT for goods in consignments not exceeding 150€. The applied concept followed the threshold of the customs duty exemption for consignments of negligible value under the Duty Relief Regulation (Regulation (EC) No 1186/2009 – ‘DRR’). Besides, as of July 2021, the Member States will need to integrate a validation mechanism in the declaration processing system (National Import Systems) to check whether the customs declaration for release for free circulation of certain low value consignments (the H7 dataset in UCC-DA Annex B) is legitimately applied. Considering all the above, the customs legislation introduced a legally binding definition for this term that safeguards the harmonised implementation throughout the EU and builds on the approach that has been used for the customs duty exemption threshold. This definition applies for the implementation of the 150€ threshold both for customs and VAT purposes, regardless of the VAT scheme used. Article 1(48) of the UCC-DA provides that “intrinsic value means:

(a) for commercial goods: the price of the goods themselves when sold for export to the customs territory of the Union, excluding transport and insurance costs, unless they are included in the price and not separately indicated on the invoice, and any other taxes and charges as ascertainable by the customs authorities from any relevant document(s);

(b) for goods of a non-commercial nature: the price which would have been paid for the goods themselves if they were sold for export to the customs territory of the Union;

Morning
Excursionist
20 0 7

@Dbaca is this the document you're quoting? (page 10): https://ec.europa.eu/taxation_customs/system/files/2021-06/guidance_on_import_and_export_of_low_valu...

Because page 19 and 20 detail how to calculate the VAT 'tax base': the 'intrinsic value' plus the 'transport and insurance costs to the destination'.

Page 20 also includes a rather large table of examples which clearly have VAT applied to 'transport fees' as well as the cost of the goods.

Dbaca
Pathfinder
166 0 42
We are discussing this with the tax Authorities right now. There is a little ambiguity
Morning
Excursionist
20 0 7

There's really not.

Morning
Excursionist
20 0 7

"The EU intermediaries that you may have nominated for IOSS are a great source of information"

I think this thread shows that's not necessarily the case, unfortunately.

Dbaca
Pathfinder
166 0 42
We are in the early days of IOSS. How things are being handled is playing itself out. I have been in Customs and Trade for 20 years. This is new and countries are getting use to it. The idea of a uniform law that raise the dutiable rate to €150 is a good thing for merchants. A uniform way to collect VAT without having to do multi-State reclamations is a good thing. Every carrier and clearance agent is learning right now. Intermediaries are seeing all the countries and shipments in bulk. We will continue to adjust to best practices as we get through the beginning of this change.
Morning
Excursionist
20 0 7

That the VAT taxable amount has not changed in not playing itself out. I really think that you should state - as the representative of an intermediary with clients reading this forum who may take your word as good advice - that you got that wrong. You confused intrinsic value with taxable amount. Own it.

London_Loves_Be
Tourist
7 0 2

@Dbaca We have a fair few shipments now that need uploading, from July 1st onwards, but I am very hesitant to do this until we know exactly what we need to show. Getting a little close to the wire as this needs to be done by this time next week at the worst. Any final advice would be most welcome at this point.

Dbaca
Pathfinder
166 0 42
Firstly I will say that the template is clear on what we need for the upload. We also have a shopify app that will allow you to avoid this step and we will roll it out early next week.

AnyDevil
Excursionist
20 0 8

Hi Damon, I'm really trying to be patient as I do appreciate this IOSS system is new to everyone, but this is a pure politician answer, it addresses nothing, it's just playing for extra time. We're not debating whether a uni-state VAT collection method is a good idea. We're asking how to submit to your system in the correct manner so our customers won't get fees because we didn't include all the required information and payment.

We didn't create an IOSS intermediary service, your business did this - it chose to make itself in this area and to accept payment for providing that service.
Your clients rely on your business to provide 1) a clearly understandable service, that is 2) compliant with the requirements of the authorities you are dealing with.  There's been a lot of feedback so far, from more than one forum, that your service is confusing due to the lack of documentation, and now we have this second (potential) issue over the shipping VAT.

Based on what has been mentioned here (and also considering that Amazon and Shopify are both charging VAT on the shipping cost, which is how it always was pre-IOSS), it does look like your business (may) have made an error. Like someone else has said, if you've made a mistake, please do own it so we can move on from this without penalties being applied. If you don't know if your business has made a mistake, or you believe your service is correctly compliant, please mention this. Anything is more useful than the reply you've just given.

If an error has been made here, then I ask you to please note that your current upload document only has a field for the sales amount and the VAT amount. In that EU document, it advises that the product sales amount and the shipping amount should be separated so that the product intrinsic value is correct. Does that mean you would need to add a new column(s) to your upload file, relating to the shipping cost and the shipping VAT?

If you have business insurance to cover claims from your clients if your system turns out to be incorrect, please let me know and I'll proceed to upload the data in the form requested (just the product sale amount, no shipping cost or shipping VAT).  I assume we've probably signed away our rights to compensation in the legal agreement, however?

I would also like to mention that a few days ago I requested if you could elaborate regarding the need to submit uploads to you daily. You said it was something to do with the clearance - can you provide more detail, please? It's a very manual process to retrieve the data for these uploads so the upload frequency makes a big difference. Someone else mentioned here that they thought IOSS is only a monthly reporting thing. I've uploaded nothing so far because I'm still waiting for this situation to play out. It sounds like I'm far from the only business here that is waiting before they do their first upload.

Morning
Excursionist
20 0 7
Until Dbaca returns from reading the VAT Directive, we can at least go back to the source ourselves.
 
The directives (link1)(link2) and regs (link) that form the new VAT e-commerce rules amend the VAT Directive (link). The Taxable Amount (link) (articles 72-89 of the VAT Directive) has not been amended.
 
So VAT must be collected on shipping costs that the customer pays. IOSS consignments are no different to any other consignment in this regard.
 
Notes on how to determine the intrinsic value (which is a different thing, Dbaca) can be found on page 68 here: link
Morning
Excursionist
20 0 7

“If an error has been made here, then I ask you to please note that your current upload document only has a field for the sales amount and the VAT amount. In that EU document, it advises that the product sales amount and the shipping amount should be separated so that the product intrinsic value is correct. Does that mean you would need to add a new column(s) to your upload file, relating to the shipping cost and the shipping VAT?”

@AnyDevil I don’t think there’s any need to separate a sale into goods and shipping for a VAT return, or for supplying that info to an intermediary filing that VAT return. The separation necessary for intrinsic value will be explicit in the electronic data that goes with the postal consignment.

Though maybe @Dbaca could answer your direct question directly.

AnyDevil
Excursionist
20 0 8

Thanks very much for clarifying. Now to wait for Dbaca to acknowledge your previous message...and half of what I wrote in my message.

Dbaca
Pathfinder
166 0 42
I am confused.. What do you need clarification about? Get. s hold of me directly and we can have a call. damon@crossborderit.com. I will give you my number and we can talk.
Dbaca
Pathfinder
166 0 42
Please contact me directly. I know the answer hear but I am getting trolled . Please if you are my customer I will answer. Contact me at damon@crossborderiit.com and we will get a call together.
Morning
Excursionist
20 0 7

Is it trolling to point out a pretty egregious error made by a representative of an intermediary - and therefore someone in a position of perceived authority on the matter? Perhaps I went too far in asking you to correct yourself, but given your position as the representative of an intermediary I had thought providing accurate advice to your clients and others might be a good idea.

Dbaca
Pathfinder
166 0 42
I stand by my statement that the VAT is levied on the cost of the goods.

I have been in international trade for the last 15 years and I have taught international trade and Supply Chain for ten years. All of these rules are interpretive. If you find a rule in a countries tariff it can at some point be interpreted differently even if you have shipped fine with that method many times. The only way around this is to have customs authorities file a ruling which applies just for your company. Because of the interpretive nature of trade rules and the fact that the IOSS is new I will not make an absolute statement.

I want you to keep in mind that my company is liable for making sure that these fees are levied correctly. I would be very safe If everyone paid on shipping as well. The tax authorities will absolutely accept this higher sum.

In order to determine the meaning of the legislation we spoke to the tax authorities , Customs and our independent tax firm. Each of them agreed that the VAT is levied on the cost of the goods without shipping however there are caveats that you see in the legislation if shipping is bundled with the price. They will except payment on the bundled shipping. I have asked the authorities and counsel.

I will not make an absolute statement I can only go on what the authorities have told me. If the interpretation changes I will let everyone know. You are also free to go to your lawyer or reach out to an EU tax authority, or any other resource that you have.

I appreciate your focus on this but I cannot keep defending this. The opinions are not mine and I did not come up with it out of thin air. I realize that this frustrates you because your interpretation is different but please understand that we are in constant contact with the authorities and we get other opinions as well. I can only do my due diligence. I am also not an anonymous person on this board and I will not make a binding legal pronouncement. Please everyone I am not an attorney and I am not making legal claims


Please feel free to check with customs, Tax authorities and any legal counsel. We can all just do our homework. This is all that we could do to clarify this issue. I have done due diligence on my side.

One way or another we submit filings next week. If someone from Brussels or any of the other member states have interpreted this differently we will know immediately. I will also communicate it immediately. This will not be egg on my face as I am not the one interpreting this. I have tens of thousands of shipments we are facilitating and it is in my best interest to get this right as well.

If you want to express your frustrations with this opinion I am happy to have a call with you.

Morning
Excursionist
20 0 7

I mean... you kinda did make an absolute statement:

The IOSS rules are different than the VAT rules and does not require you to collect VAT on shipping. I have a Swedish document that states that but I am going to translate it and get it on the forum.

And to back that up you quoted a section of a document - a section dealing with intrinsic value, not taxable amount. And ignored the implication that VAT is due on shipping on pages 19 and 20 of that document, an implication shared on page 68 of the Explanatory Notes. And that transport and insurance costs are included in the customs declaration for IOSS consignments and are to be transmitted to the gloriously named Surveillance, from which VAT due and VAT paid is cross checked. Not to mention the VAT Directive.

Fair enough. Seems a bold move, given what's in the VAT Directive and that document you quoted. And given what everyone else is doing. But you've got your advice, so fair enough.

RCG
Excursionist
22 0 9

Hello. We have been trying to figure out the website to register for an IOSS number and we are still coming up empty handed. There are a lot of these websites that are attempting to hold our hands through this whole process of registering and overcharge for it, but why do we need them? All we need the actual website to register, no?

It appears the VAT functionality is now live via tax settings in the shopify selling profile. 

We are losing a lot of business because we can't ship to EU anymore.

Where are the clear answers? Why is there no tutorial or assistance through this process from Shopify? Can someone help?

proben
Visitor
2 0 0

Even if you do enter the IOSS number their systems are not working with it.  Our store currency is in USD and Shopifys system is confusing that with the Euro amount

 

Eg sale is $160 and less than the 150 Euros so tax should be added on at checkout

but it isnt as it thinks the $ amount is the Euro amount

 

Been trying to get this sorted with them for over 3  weeks now and will soon be involving our legal teams if it doesnt get sorted soon

Roseraie_Gal
Visitor
1 0 0

I don't know whether I should claim VAT excluded.  Should I let the customers pay VAT upon the delivery?

What do you guys think?

Dbaca
Pathfinder
166 0 42

Our Shopify APP is ready. I will upload all the data without needing to do it manually. 

You will need to have your IOSS number from us. Then E-mail support@crossborderit.com with your Shopify Domain and we will build you a private link. 

In a few weeks when the public APP is working you will need to switch from the private app to the public one which will have more functionality. 

London_Loves_Be
Tourist
7 0 2

@Dbaca just emailed you guys, need that link asap, please.

Dbaca
Pathfinder
166 0 42
We are working on creating them.
AnyDevil
Excursionist
20 0 8

@Dbaca 

I emailed your business on Friday 10am UK time asking about the Shopify app link. On Monday you sent two emails from your own address, urging your customers to hurry up with their submissions and to reply to you if needed. I replied Monday evening saying I am waiting for your general support email to respond.  What is the current response timescale, please?

You mentioned in your email that you need these reports daily. I've asked on this thread on more than one occasion if you can please explain the daily requirement in more detail so we all can understand better, because these reports appear to be submitted monthly. It is incredibly manual to make these uploads (before there is access to your app), so it's much easier to make them once or a few times a month instead of daily.  I last asked about this here in a long message, to which you gave a very short reply that didn't acknowledge most of what I'd queried.

Regarding the ongoing debate here of whether VAT should be applied to the shipping charge and submitted via IOSS, or not, please see the EU IOSS bible that has previously been linked here.
On page 68-69 it mentions this (screenshot): "VAT is applied on the total value of the sale....the goods and the transport charges", which appears to state that the VAT is applicable on the shipping charge. You've mentioned before that Amazon and Shopify are getting it wrong by applying VAT on the transport charge. This suggests to me that they are handling it correctly, which would mean that Crossborderit isn't - can you please advise?

Dbaca
Pathfinder
166 0 42
We have submitted our app to Shopify. They expect that it will take five business days but that will get rid of this manual step at least for Shopify users. We quit sending the private app when Shopify expedited the approval for the Public app.

We are not just reporting VAT, We are working with clearance agents not all of them but some as this is the core of our main business. So we need to know what is in the system as soon as possible. I realize this is a challenge when folks are manual but it works automatically if you have the app. We will have other extensions shortly.

We do not like the manual aspect of the uploads either as they are challenging for us as well.
AnyDevil
Excursionist
20 0 8

Hi Damon, please can you provide an update on this. Do you have any better idea of when the public app will be approved?

You mention you stopped sending out the private link when Shopify expedited the approval - that created a single point of failure that assumed them actually meeting that timescale. Shopify are well known for taking a long time to approve apps by requiring amends to be made to meet their satisfaction.  In the meantime, your business seems to not be responding to requests for the private link - I emailed 2 weeks ago, no reply. I also emailed you 10 days ago, no reply.

What's the latest plan, please? We've had an issue now with Swedish customers receiving a letter that they might have to pay VAT pending further investigation. That is correct, because we haven't submitted the data, because we were waiting to be given access to the app.

Thanks

Dbaca
Pathfinder
166 0 42
Yes we have had a challenge with the Public app.. We are working on it. Shopify is saying the end of the month. We will have another version of the private app this week that can be installed in the short term.

SMU
Excursionist
26 0 49

Hi has anyone else had an error code come up when attempting to install the app on shopify?

If anyone has any advice...I am not tecchy at all, I would appreciate it. Thank you

Morning
Excursionist
20 0 7

Until Crossborder it makes clear how their advisors came to the conclusion that VAT shouldn’t be collected on shipping, I don’t see there being much debate.

It may be the case that as EU states transition into the new rules, certain customs declarations may not result in the shipping cost part of an IOSS consignment being transmitted to the central Suveillance system that collates VAT due. However, if the consignment is declared using the H7 dataset around which the IOSS was designed, it is very clear that both the goods value and shipping cost value will be transmitted and the VAT will be due in both. That’s clear from the document that Dbaca selectively quoted to assert that VAT wasn’t due on shipping.

If Crossborderit can guarantee that no IOSS consignment - in any of the 27 member states - will be declared using the H7 data set, then maybe there’s a case to say that VAT doesn’t need to be collected on shipping. But how can they guarantee that, especially going forward as new systems are put in place?

And there the fact that it is the clear, obvious, explicit intention that VAT is due on both goods and shipping. Even the Swedish tax agency, though which Crossborderit are registered as an Intermediary, confirmed to me that VAT is due on goods and shipping for IOSS purposes.

Crossborderit doesn’t want to keep discussing this, but if they’re going to assert something against all available evidence, they need to tell their clients why.

RCG
Excursionist
22 0 9

@Morning Thank you for this information about VAT being charged on shipping charges as well. We did not know that.

Currently in the shopify tax settings there is an option to turn on automatic VAT collecting based on the buyers address. Do you know if this is implemented into their software? 

We are still in limbo as far this whole thing goes and we no longer ship to the EU at all. We would like to be able to ship to the EU like we have for many years, but due to the opacity and vagueness of the whole transition, we've switched to a system where we use a distributor based in the UK.

RCG
Excursionist
22 0 9

@Dbaca what is your solution? I'd like to review.

Dbaca
Pathfinder
166 0 42

I hope this clarifies that VAT should not be calculated on Shipping. 

Definitions and main customs concepts 1.3.1. Intrinsic value

 

The new VAT rules for e-commerce have introduced special schemes for the calculation of the import VAT for goods in consignments not exceeding 150€. The applied concept followed the threshold of the customs duty exemption for consignments of negligible value under the Duty Relief Regulation (Regulation (EC) No 1186/2009 – ‘DRR’). Besides, as of July 2021, the Member States will need to integrate a validation mechanism in the declaration processing system (National Import Systems) to check whether the customs declaration for release for free circulation of certain low value consignments (the H7 dataset in UCC-DA Annex B) is legitimately applied. Considering all the above, the customs legislation introduced a legally binding definition for this term that safeguards the harmonised implementation throughout the EU and builds on the approach that has been used for the customs duty exemption threshold. This definition applies for the implementation of the 150€ threshold both for customs and VAT purposes, regardless of the VAT scheme used. Article 1(48) of the UCC-DA provides that “intrinsic value means:

(a) for commercial goods: the price of the goods themselves when sold for export to the customs territory of the Union, excluding transport and insurance costs, unless they are included in the price and not separately indicated on the invoice, and any other taxes and charges as ascertainable by the customs authorities from any relevant document(s);

(b) for goods of a non-commercial nature: the price which would have been paid for the goods themselves if they were sold for export to the customs territory of the Union;

Dbaca
Pathfinder
166 0 42
Email support@crossborderit.com to make sure this is done correctly.
Thank you,
Damon
London_Loves_Be
Tourist
7 0 2

@Dbaca Thanks for your reply we have emailed that email address over a week ago without reply, sadly.

Dbaca
Pathfinder
166 0 42

Have we gotten this solved. I will connect you directly to a support person if needed.