How to Input VAT/IOSS Numbers Into Customs Forms

October 1st, 2021 Comments off

Starting July 1, 2021, all commercial goods destined for the European Union (EU) are subject to Value Added Tax (VAT). This applies to deliveries of any value, including those below 22 euros (estimated $26).  To help online retailers manage this tax collecting process, the EU member countries created the Import One-Stop Shop (IOSS), an electronic portal for online retailers to comply with the new VAT rules.  After registering for an IOSS  account, you will receive an IOSS tax identification number which should be inputted on all Customs Forms for your packages.

First 90 Days – How is the IOSS Working?
Stamps.com Customer Care has been monitoring the deliveries to the EU very closely since July 1, 2021.  Overall, most packages have included the new IOSS information and packages are being delivered.   We have discovered some shippers are inputting VAT/IOSS information incorrectly in the Stamps.com software interface, which is creating unnecessary duty and tax bills for shipments. 

Customer Care has also noticed many shippers are NOT inputting IOSS numbers on low value orders, which is now required.  This action pushes the responsibility of delivery fees, duties and taxes to the package recipient.  If the recipient does not want to pay these extra charges, the package will be returned to sender.

INSTRUCTIONS FOR INPUTTING VAT/IOSS NUMBERS INTO CUSTOMS FORMS USING STAMPS.COM

Stamps.com Software

1) From the “International” tab, input the delivery address and package details.
2) In the “Customs” section, please click on the “Edit Form”.
3) Input your IOSS tax identification number in the designated field.  Finish by clicking “Add Item” (on far right side) and then “OK”

Stamps.com Website

#1 Input the international delivery address and select the carrier info for the label.
#2 In the “Contents” section, click on “Customs Form” button.
#3 Input your IOSS tax identification number in the designated field. Finish inputting the item description and click “Add item”.

Important information to remember:

  • For orders being delivered to the United Kingdom, “IOSS #” field will be labeled “VAT #” in the Customs Form.
  • If you are selling through a marketplace, such as eBay or Amazon, be sure to include that marketplace’s IOSS number in the Customs Form. If you do not, the receiving EU country will assume VAT has not been collected.

Learn more about the European VAT requirements that started July 1, 2021.

Value-Added Tax (VAT) Rates By EU Country

July 14th, 2021 Comments off

Only July 1, 2021, the European Union (EU) introduced new Value-Added Tax (VAT) requirements for all parcels entering EU-member countries. One big change is that products valued at 22 euros (approximately $26) or less now have VAT applied in order for the buyer to take receipt of the product.

What is VAT?
VAT is a consumer tax that European governments use to collect revenue on all goods and services consumed by their residents, including products that were made outside of the EU. VAT is used somewhat to even the playing field for European manufacturers as well as increase tax revenues. Generally speaking, VAT is paid by the buyer to the seller and then the seller gives either all the fees, or a large portion of the fees collected to the EU government where the product was imported.

EU countries are responsible for creating their own VAT rate, but they need to have a standard VAT of at least 15%.

Listed below are the current EU standard rates as of July 1, 2021:

EU Country (as of July 1, 2021)Standard VAT on Taxable goods and services
Austria20%
Belgium21%
Bulgaria21%
Croatia25%
Cyprus19%
Czech Republic21%
Denmark25%
Estonia20%
Finland24%
France20%
Germany19%
Greece24%
Hungary27%
Ireland23%
Italy22%
Latvia21%
Lithuania21%
Luxembourg17%
Malta18%
Netherlands21%
Poland23%
Portugal23%
Romania19%
Slovakia20%
Slovenia22%
Spain21%
Sweden25%

Shipping to EU? New VAT Rules Starting July 1, 2021

June 21st, 2021 Comments off
EU VAT changes starting July 1, 2021

The European Union (EU), a group of 27 countries including Germany and France, will be implementing new trade rules for U.S. sellers beginning July 1, 2021. The EU has modified the Value-Added Tax (VAT) – a tax on goods and services bought and delivered to the EU countries. Sellers in the U.S. will need to understand how to comply with these new laws and prepare for the changes. 

What changes to the EU VAT will take place on July 1, 2021?
Prior to July 1, 2021, no VAT fees were required for commercial goods valued up to 22 euros (approximately $26).  Goods valued at 22 euros or less were able to be shipped into EU countries with no additional fees required for buyers.

After July 1, 2021, all goods imported to the EU valued at up to 150 euros (approximately $178) will be subject to VAT and items valued at more than 150 euros will be subject to VAT and duties. VAT rates are different for each EU country based on the service and type of product being delivered, with most VAT fees ranging around 20% of the total cost (sales price plus shipping).  

Product PriceUntil June 30, 2021Starting July 1, 2021
€0 – €22Exempt – No VAT requiredVAT applied (with IOSS for B2C, or upon import for B2C/B2B)
€23 – €150VAT applied upon importVAT applied (with IOSS for B2C, or upon import for B2C/B2B)
Above €150VAT applied upon importVAT applied with duties (Upon import, Standard VAT Payment)

What are my options for collecting VAT for EU countries?
The new rules give sellers two options:

#1 Preferred Method: Import One-Stop Shop (IOSS): The EU member countries have created a new electronic portal for B2C transactions, known as the IOSS, which makes it easier for online retailers to comply with the new VAT rules. This program is intended to help expedite the Customs and VAT collection process and allow the EU buyer to see the full landed cost including the VAT fees at the point of sale (i.e. inside the shopping cart). Businesses will need to register on the IOSS portal, provide an IOSS tax identification number during Customs creation and provide the recipient’s email and/or phone number along with a Harmonized System (HS) Code for the product being shipped. Online retailers only need to be registered with a single EU member country via the IOSS system to access trading within all 27 EU countries.

Additionally, retailers will need to establish an “intermediary,” a representative located in any one of the 27 EU countries who, representing the online retailer, will submit the VAT payments each quarter as well as process any returns.

Important Note: The IOSS portal is NOT required for U.S. sellers. It is an optional program intended to expedite e-commerce order delivery to EU countries, while collecting VAT efficiently. U.S. sellers who do not register for IOSS will have their packages delivered Delivery Duty Unpaid, meaning the buyer must pay VAT and potential additional customs clearance fees before the shipping carrier will release their package.

#2 Delivery Duty Unpaid (DDU): This option only requires the recipient’s email or phone number, an accurate product description and a HS Code. The downsides to shipping orders using DDU are that if the VAT is not paid at the shopping cart, the buyer in the EU country becomes responsible for paying the fees before they can receive their product. Buyers could get “buyer’s remorse” due to high extra fees required to receive their product and abandon the order, asking for a full refund. 

Additionally, not using the IOSS system can cause items to be held up in customs for lengthy periods of time until the VAT is paid. Overall, this option will lead to a poor customer experience and reflect badly on your business.

Selling to International Buyers using a Marketplace?
Online retailers using marketplaces such as Amazon, eBay and Etsy will have a separate set of VAT rules.  Marketplaces are considered to be involved in the sale and supply of goods, and thus the EU is requiring the marketplace to be liable for collecting and paying the VAT fees. Starting July 1, 2021, Marketplaces will collect VAT from the buyer based on the country of delivery and remit it to the responsible tax authorities. Note: VAT will be collected on the full value of the transaction including shipping costs, as the shipping costs are considered part of the total purchase.

What about Customs Forms?
Your formal customs declaration will now require more information about the items you are sending. Pro forma and commercial invoices must provide clear and accurate data including a description of goods, the quantity of items, itemized values and custom tariff codes.  It is also recommended that you provide an accurate product description and HS Code.  GlobalPost Logistics has a free tool that generates HS codes for any product using the World Customs Organization schedule.

What steps should I take now?
Merchants need to register with the IOSS portal before July 1, as well as find a VAT intermediary like Hellotax, Simply VAT, Taxually or Avalara. Next you will need to make sure your shopping cart has the capabilities to collect VAT at the point of purchase. Most shopping cart vendors are preparing for the July 1, 2021 deadline and have set up special tax rules inside the cart settings page. If you use Shopify, check out the information under “Setting up EU taxes” in the help center section on their website.

Final thoughts.
Registering with the IOSS portal and selecting an intermediary can help your business generate brand loyalty and customer retention by creating a hassle-free VAT collection. July 1 is right around the corner, so make sure you set yourself up for success by complying with these new tax rules.

New GlobalPost Processing Hub Opens in Houston, Texas

April 21st, 2021 Comments off

GlobalPost International Shipping Services

GlobalPost, the industry leader in affordable, innovative international shipping services, today announced the addition of a new processing hub near Houston, Texas. Warehouses, fulfillment centers and online retailers in the Houston metropolitan area will now qualify for consolidation discounts and free package pickups for shippers doing a minimum of 30 shipments per day. GlobalPost customers typically save at least 30% on shipping rates by consolidating their international parcels. They also benefit from exclusive features such as electronic customs forms and free coverage against loss or damage on every shipment.

GlobalPost is available in the most popular shipping software applications including Stamps.com.

About GlobalPost
The GlobalPost delivery network leverages partnerships with international postal operators as well as commercial carriers to offer worldwide delivery. GlobalPost services reach over 200 countries and territories and includes unique features not found in traditional international shipping service.

Categories: International Shipping Tags:

Shipping from the U.S. to UK with 2021 VAT Rules

December 22nd, 2020 Comments off

Starting January 1, 2021, shipping to the UK is becoming more complex due to Brexit.

If you’re an online retailer shipping products from the U.S. to the United Kingdom (UK), you will need to change your fulfillment process starting January 1, 2021.  The UK has left the European Union trading relationship and the country has implemented new rules for goods and services to be imported into the UK.

Brexit Background – UK Exits the European Union Trade Agreement

The UK officially left the European Union on January 31, 2020, a process that is commonly called “Brexit.”  This announcement triggered a “transition period,” where trade would continue as is with no changes to UK Value-Added Tax (VAT) rules, treatment of transactions or filings through December 31, 2020. 

Starting on January 1, 2021, all UK imports and exports will fall under the World Trade Organization (WTO) terms, which requires changes to many fulfillment processes for U.S. e-commerce parcel deliveries to the UK. 

Changes for E-commerce Orders Being Delivered to UK:

Under the World Trade Order terms, there are four important changes occurring for products being shipped to the UK from the U.S. (along with all countries):

#1 Register for VAT and Collect VAT Fees:  As a U.S. online retailer, you will now be required to register for a VAT number and create an online account from HM Revenue and Customs (HMRC) in order to deliver e-commerce orders into the UK.  Once you have your VAT number, you will be required to collect all VAT fees from your buyers at time of product purchase. This VAT fee was previously being completed when a parcel entered the UK, typically with the buyer having to pay VAT to release the package from Customs.  The new WTO rules pushes that VT tax collection burden to the online retailer in the U.S. who is exporting the product to the UK.

VAT rates for collection depend on the product price:

A)     Most Goods and Services valued UNDER £135 have a 20% VAT Rate

Goods and services shipped to the UK with a value between £0.01 and £135 (between $1 and approximately $180 USD) will incur VAT fee of 20% of the product price (not including shipping fees).  U.S. online retailers selling products to UK buyers are require to collect this 20% VAT fee at the time of sale.  Online retailers will be responsible to pay all VAT collected to HMRC every three months.

B)     VAT for Goods and Services valued OVER £135

All shipments with goods and services valued higher than £135 (approximately $180 USD) will be subject to the current VAT procedures, which state VAT is payable as the parcels are being imported into the UK.  These types of packages are often cleared through customs via parcel consolidators and all applicable duties and VAT will be paid to HMRC directly by the parcel consolidator, who then normally invoices the online retailer.

#2 Make Quarterly VAT Return Payments to HMRC:  Online retailers must report and pay the VAT Return (taxes) collected from their online sales each quarter to HMRC. You can find your actual deadline inside your VAT online account, but in general the deadline for HMRC’s bank to receive payment is one calendar month plus 7 days after the end of the accounting period (annual quarter).  If your VAT Return payment is late, you could be liable for additional late fees.

To submit your VAT Return, you can use HMRC’s free online service or one of the many commercial accounting software platforms that HMRC has partnered with. The approved software list includes many popular solutions such as QuickBooks Online, Sage Business Cloud and SAP. 

Your quarterly VAT Return should include key data points for your UK sales such as:

· Total sales and purchases for your account (only orders delivered to UK)
· The amount of VAT you owe from your UK sales
· The amount of VAT you can reclaim (i.e. order returns, product defects)
· The amount of VAT refund due from HRMC

#3 More Info Required in Customs Documents: All parcel shipments into the UK will be subject to customs clearance and inspections, which could add significant delays for parcels being delivered to the buyer.  U.S. online retailers shipping goods or services into the UK will need to provide import or export declarations to UK Customs.  A customs invoice will be required for each parcel that shows UK VAT along with the product price in order for the parcel to be released out of customs.

#4 Elimination of the Low Value Consignment Relief: In addition to implementing the WTO trade terms, the UK is removing Low Value Consignment Relief (LVCR) – a rule that allowed good and products from outside the EU that had a value of £15 or less (estimated $20) to be tax exempt.  In 2021, those products will now be subject to the 20% VAT rate.

The UK is taking these actions to ensure that goods and services from outside the UK are treated in the same manner as products within the country, so as UK businesses are not disadvantaged by competition from VAT free imports.

Failure to adhere to these new UK Customs procedures could result in:
· Parcels being refused entry into the UK by customs
· Parcels being returned to sender (including return shipping fees depending on carrier used)
· Parcels and products being destroyed
· Parcels incurring major delays in being delivered to buyer
· Parcels generating additional shipping and/or customs fees, or penalties

Required actions to sell and ship products into the UK in 2021

Starting January 1, 2021, online retailers selling goods or services to UK buyers will be required to register their business with the HM Revenue and Customs (HMRC) to obtain a VAT number.  Here are the steps to complete this process:

How to Create UK Government Gateway Account and Register for VAT

1.            Go to the HMRC login in page by clicking the following link:
https://www.gov.uk/log-in-register-hmrc-online-services

2.            Click on the Green “Sign in” button.

3.            Click on “Create sign in details”.

4.            Enter your Email Address and click “Continue”.

5.            The site will email you a “Confirmation code”.  Enter the code and click the Green “Confirm” button to continue.

6.            User ID Issued.

7.            Enter your name.

8.            Create a Password and hit “Continue”.

9.            Set up a Recovery Password and click “Continue”.

10.         You will now receive your Government Gateway User ID which consists of 12 numbers.

11.         You will then need to register for VAT using your Government Gateway User ID and Password.

To register with HMRC for a VAT number, proceed to the following link:
https://www.gov.uk/vat-registration/how-to-register

Do Sellers on eBay, Amazon or another Online Marketplace Have to Collect VAT?

Online marketplaces (OMP) such as eBay, Amazon, Etsy and others will be responsible for collecting the VAT from the buyer when the sale occurs on their website as long as the price is £135 or less.  For sales that are over £135, the OMP will not collect the VAT and existing import rules will go into effect (seller pays at port of entry).

Categories: International Shipping Tags:

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