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If you are an eCommerce seller who sells from a non-EU country to the EU, or ships orders from non-EU country to EU, it is likely that you would have heard about the new EU VAT rules and the IOSS system that took effect from July 1st 2021.
With a considerable amount of dropshipper clients targeting the EU, HyperSKU has been working with relevant parties to provide a cost-effective and compliant fulfillment solution to meet all needs. But don’t worry, we’ve got you covered about everything in this blog; read on!
In this article, we will discuss the following topics:
- What is meant by IOSS and OSS?
- Do I need IOSS if selling on Amazon, eBay, Shopify, and WooCommerce?
- How to ship to the EU without an IOSS number?
- What to do if I don’t have IOSS number?
- Can I send DDU? and are there any risks of DDU?
- Can I send DDP? and how much does DDP cost?
What is the IOSS?
IOSS (Import One Stop Shop) is a new system to efficiently process the import, fasten custom clearance and unify taxation. From July 1st, 2021, the 22-euro threshold is voided, and all B2C parcels imported outside the EU are subject to import VAT.
If you are an online seller who sells to the EU and hires suppliers outside the EU, no matter where you are, your orders are subject to import VAT and the IOSS regulations.
This includes selling on Shopify, Amazon, eBay, WooCommerce, and other eCommerce platforms.
What is the OSS?
OSS (one-stop-shop) is the portal that simplifies sales VAT within the EU. From July 1st, 2021, all B2C parcels shipped from one country to another within the European Union are subject to sales VAT and OSS systems. The distance-selling threshold is withdrawn and the seller may register a single OSS account to file their pan-EU selling.
If you are an eCommerce entrepreneur (on Shopify, Amazon, eBay, etc.) located in EU, and sell within the EU, your orders are subject to sales VAT and the OSS systems.
VAT values for EU countries:
We have also provided the VAT values for all the EU countries down below (in alphabetical order), the least VAT value being charged by Luxemburg at 17% and the maximum VAT value charged by Hungary at 27%.
- Austria 20%
- Belgium 21%
- Bulgaria 20%
- Croatia 25%
- Cyprus 19%
- Czech Republic 21%
- Denmark 25%
- Estonia 20%
- Finland 24%
- France 20%
- Germany 19%
- Greece 24%
- Hungary 27%
- Ireland 23%
- Italy 22%
- Lithuania 21%
- Latvia 21%
- Luxemburg 17%
- Malta 18%
- Netherlands 21%
- Poland 23%
- Portugal 23%
- Romania 19%
- Slovakia 20%
- Slovenia 22%
- Spain 21%
- Sweden 25%
Selling into EU as an eCommerce entrepreneur:
1. Selling on a Marketplace
If you are an online entrepreneur and sell on a marketplace platform such as Amazon and eBay, follow their instructions carefully. Take Amazon for example, if you are MFN (Merchant Fulfilled Network) seller fulfilling from a non-EU country, Amazon will collect the import VAT and pay to tax authority. The seller needs to make sure the price is VAT-included, and provide IOSS number to the logistics carrier, which can be found in their Amazon Seller Central.
2. Selling Via Your Own Shop
If you sell on your own store on an eCommerce platform, such as Shopify, WooCommerce, CommerceHQ, etc, then there are two possibilities:
You have an IOSS number:
If you are registered to the IOSS platform and already have an IOSS number registration number, you will need to provide your IOSS number to the shipping carrier; this way, your parcels in the EU will be delivered without applying any additional cost. Your parcels will pass custom clearance fast and your customers don’t need to pay additional cost either.
In some platform such as Shopify, you can fill in your IOSS number in the settings, so you can set up the accurate VAT rates for each country, for example, 20% for France, 21% for Spain, and 22% for Italy.
You don’t have an IOSS number:
If you do not have an IOSS number, you can still deliver products to the EU – in theory, legit shipping carriers can provide DDU (no IOSS) and DDP (shipping carrier’s IOSS) shipping according to your preference. Read on to find out how.
Can I send Delivered Duty Unpaid (DDU)? Are there any risks of DDU?
Some sellers consider sending DDU, so they do not have to think about IOSS. You could send DDU via postal service, but it comes with many risks:
- Your customers have to pay for VAT when the parcel arrives at customs. This is an unexpected fee, and your customer may refuse the parcel and dispute the order, and then you would have to refund the customer. This would also leave a negative impression in front of the customer and cause high dispute rate.
- Even if the customer accepts to pay for the VAT, the entire process will still be much slower since the total shipping time for DDU is 14 to 30 days.
DDU can lead to a terrible customer experience and could sabotage your store.
Can I send Deliver Duty Paid (DDP)?
Yes, you can send DDP, and in fact, it is a better option than DDU due to the following reasons:
- The customs clearance is faster. The entire shipping process from a non-EU country to the EU takes about 7 to 12 days, which is way faster than DDU.
- Your customers would not be disturbed, and you can offer them the same high-quality services as before.
How much does DDP cost?
The shipping fee of DDP is the same as before, but you do need to take the VAT import tax into consideration. (You can check the VAT values for EU countries mentioned earlier in the article.) It’s worth knowing that from January 1st, 2022, sellers can ultilize France tax authority’s deferment scheme to ease their cash flow pressure.
Sending DDP requires an IOSS number. If you are in the EU, you can register IOSS easily, but if you are not in the EU, you will need an intermediary or a negotiator to register IOSS on your behalf.
However, if you do not want to register IOSS at all, we got you covered. HyperSKU can take care of it. We will use our 3PL’s IOSS number that would help you in sending DDP, with just a percentage of handling fees. Contact our team for details!