If you are shipping to Europe, having the correct tax information will ensure the package passes through customs smoothly. In this article, we will go over the different types of identifiers, and how to add these to your shipments.
Any merchant moving goods into or out of the EU requires an EORI (Economic Operators Registration and Identification number) to properly assess customs duties. Although each EU Member State can provide EORI numbers, Merchants only need one EORI for the entire EU, no matter how many EU Countries/Member States it services. Shippers should use their EORI number in all communications with any EU Customs where a customs identifier is required. For more information on EORI, visit the European Commission website.
Starting in 2021, merchants moving goods into or out of the UK will need GB EORI number. VAT-registered businesses were automatically issued with an EORI number in September 2019. Businesses without a GB EORI can apply for free.
Tax ID/VAT are codes that determine how a merchant will be assessed for tax purposes. One seller may have multiple numbers, depending on the countries they are shipping from/to so this may vary by shipment.
The Tax ID used in the United States is called the EIN, or Employer Identification Number. U.S. Customs Border Protection (CBP) guidelines require that import/export filings include the shipper's Employer Identification Number (EIN).
VAT stands for Value Added Tax. VAT numbers are widely used rather than EIN in Europe, the UK, and elsewhere around the world.
IOSS (FedEx, UPS, DHL Express, DHL eCommerce and USPS only)
The EU is launching an Import One Stop Shop (IOSS) platform to simplify the declaration and the
payment of VAT for B2C imports up to a value of €150—if the value of the shipment is over €150, it is considered DDU and the VAT tax is decided at customs. This optional platform only requires you to register with a single EU Member State to manage your sales VAT throughout the EU, removing the need to register for VAT in every country you are selling goods to.
If you are a non-EU based supplier or marketplace selling goods to consumers in the EU, registering with the IOSS means you can collect accurate VAT for the purchase from the consumer at the point of sale, which can then be declared and paid in a periodic VAT return. If you are a merchant that collects VAT tax on your site, your IOSS ID should be passed. If the marketplace (i.e eBay Canada) collects VAT tax at the point of sale, the marketplace's IOSS ID should be passed.
Shipments containing a valid IOSS number will therefore not be subject to import VAT, which may help them move through customs quicker. If an IOSS ID is provided, you will need to change the "Incoterm" to DDP. If left as DDU (which is the default) it may lead to double taxation.
If your company does not have an EU-based establishment and you wish to register for the IOSS, you will need to appoint an intermediary to settle VAT through this platform.
Registering for the IOSS platform is not obligatory and you can continue to declare and pay VAT on EU imports as you do today.
Note: IOSS will only be passed for UPS, FedEx, DHL Express, DHL eCommerce, USPS Priority Mail International, and USPS Priority Mail Express International shipments to Europe.
You can add your TaxID/VAT, EORI, or IOSS to the customs declaration data in Shippo for any international order, by editing the Customs Declaration:
VAT for the EU & UK, effective 2021
VAT changes for the UK, effective January 2021 (Brexit)
- VAT de minimus has been eliminated for the UK. Translation: orders up to $135 GBP used to be VAT free. Now, VAT is due on all purchases of any amount.
- Merchants must charge & collect VAT at the time of purchase, before shipment. This affects B2C (Business to customer), B2B (Business to business) and C2C (Customer to customer) sales.
- For B2C, shipments up to $135 GBP, which used to have tax/VAT waived, must now be taxed.
- Furthermore, that VAT must be collected from the shopper and paid before shipment. This means that merchants must send their shipments DDP (Shippo default to DDU, please see Customs Declarations in Shippo); merchants will have to collect that tax amount (20%) from their shoppers upfront.
- Merchants need to register for a GB VAT if they haven't already. Merchants will need to pay their VAT due periodically. More info here: https://www.gov.uk/vat-returns
- For B2B sales, merchants should follow the same rules they do now for shipments over $135 GBP.
- For C2C:
- Up to $39 GBP exempted from Duties & VAT
- Between $39 GBP and $135 GBP: exempted from Duty, VAT paid by shopper
- Above $135 GBP: Duty & VAT applies, paid by shopper
VAT changes for the EU, effective July 2021
- VAT de minimus will be eliminated for the EU in July 2021. Translation: orders up to 150 EUR used to be VAT free. Now, VAT is due on all purchases of any amount.