Brexit Phase II - IOSS

[GamesLore]

We've navigated Brexit Phase 1 - base VAT has been resolved and EU VAT is being charged, customs fees incorporated into the Shipping so that we can ship DDP into the EU via those couriers who support the operation, or at least those for whom it has been cost effective too. After a very slow start with the couriers packages are now being delivered (mostly) in a pretty timely fashion and the reject / return rate is back to a more or less acceptable level though some backlogs are still occurring.

However, as of July 1st 2021 we now have to deal with the implications of the IOSS scheme. Orders up to 150 euros we can continue to treat as DDP, though there is plenty of contradiction over where the import declaration should occur - orders above that seem to have to be processed as DDU.

Has anyone worked out how to implement this within Sellerdeck yet and is there any guidance around this? I've searched the forums but not had any success in finding discussion on this.

For those who don't know about this and it's going to affect you then the start point for this might be: https://ec.europa.eu/taxation_custom...r-ecommerce_en. Note that lots of other companies etc are offering 'advice' in this area.

[Josh Barling]

Thanks for the post, its good to hear directly from merchants their individual experiences.

We've been and are still learning about IOSS and trying to understand the impact on merchants and the technology requirements.

From our understanding of IOSS, the two key points are:
- DDP for orders under 150 euros and one quarterly VAT return for the entire EU through IOSS
- No import duty paid on goods under 150 euros

There are clear benefits for IOSS; however we believe there will be issues with it as well.

Having a VAT rule change based on cart value can be a bad experience for the customer, especially when you do not know their location until the checkout; I'm certain it will create confusion, resulting in more returns and customer service enquiries.
If you have the same VAT and Import Duty approach on all orders (DDP) and therefore a consistent message to the online browsers, then you will need a separate VAT registration with each EU country when accepting orders over 150 euros – therefore, more than likely, making the main purpose of IOSS redundant.

Right now, you can setup a maximum value threshold based on the location. So you could change your VAT settings to match the requirements for IOSS and limit order value to 150 euros (converted into pounds). However, that would mean you couldn’t accept online orders over that value – in our opinion that is not the best way forward.

At the moment, Sellerdeck Desktop cannot change the VAT rules based on cart value and location. That is a major development in a complex and risky area of the software.
We have not agreed a way forward just yet, but have been speaking directly with customers to better understand their scenarios.

I’m keen to learn more, from our customers. If you are open to sharing your situation and thoughts I’d love to setup a call. Please drop me an email.

Thanks, Josh

[martindowling]

Apologies if this is going off topic.

We are not VAT registered but are considering registering with IOSS to be ready for the changes in July. Has anyone done this - if so could you explain the process please? According to this page
https://ec.europa.eu/taxation_custom...ss/vat/ioss_en
you need an EU intermediary to do this which makes us wonder if it is worthwhile at all for relatively low volumes of EU sales.

I suspect that we might find it better to abandon EU sales altogether, but it is worth looking into I think.

[GamesLore]

Hi Josh,

I haven't responded yet because we and the couriers we're talking to still don't fully understand how this is going to be implemented within the EU and the reality is many countries and the couriers do not appear ready for this change from countries outside the EU.

One of the key points is whether you can continue to offer delivery duty paid B2C both above and below 150 euros and to continue payment via the couriers thereby cutting out the need to register for IOSS altogether. The sticking point for this is that the couriers would typically clear in France, Belgium or Holland and use the default VAT rates there but some countries seem to expect the clearance to happen in their jurisdiction rather than somewhere within the EU and the couriers don't seem to have planned for the correct country VAT rate to be used.

Although those conversations continue we have signed up to IOSS as a defensive measure.

So many unknowns, so little time remaining.

Rgds, Paul.

[Mantra]

We are not VAT registered but are considering registering with IOSS to be ready for the changes in July. Has anyone done this - if so could you explain the process please? According to this page
https://ec.europa.eu/taxation_custom...ss/vat/ioss_en
you need an EU intermediary to do this which makes us wonder if it is worthwhile at all for relatively low volumes of EU sales.

I suspect that we might find it better to abandon EU sales altogether, but it is worth looking into I think.

We have low volumes of EU sales and the products we sell are mostly low value jiffy packet size so we use Royal Mail as the most convenient and economic delivery option but they do not appear to offer a Delivery Duty Paid service for exports to the EU but if anyone knows any different I would be interested to know.

I checked an EU Intermediary online and found that they charge £7.50 per package for the service which I expect is an additional cost to the normal postage / shipping costs and then there would be additional administration needed to interface with the EU Intermediary System, report and account for EU VAT.

From my point of view it is looking like continuing with EU sales for low volumes is no longer economically viable.

[guccij]

Solitions are available and integrations also. See https://www.taxamo.com/taxamo-assure-rmg/integration and https://www.royalmail.com/import-one-stop-shop-ioss Unforunately none of these works for us. We will simply add a note to EU orders explaining that they will have to pay VAT and possibly import duties on delivery.

[Mantra]

Solitions are available and integrations also. See https://www.taxamo.com/taxamo-assure-rmg/integration and https://www.royalmail.com/import-one-stop-shop-ioss Unforunately none of these works for us. We will simply add a note to EU orders explaining that they will have to pay VAT and possibly import duties on delivery.

- see latest update concerning Postal Deliver Duties Paid (PDDP) from Royal Mail Business:

https://www.royalmail.com/business/i...ties-paid-ioss

I would be interested to learn from anyone that has explored these options.

We have suspended exporting to EU pending a solution to avoid potential problems with delivery delays, returns etc. - still seems more trouble than its worth for small low value packages!

Martin
Mantra Audio

[DJO]

After Brexit phase 1, it has taken nearly six months for our EU customers to get used to paying there own governments taxes, so the thought of complicating the matter again with IOSS made me also want to throw in the towel with Europe.

Then I read the DPD issue on the requirements for IOSS. and after the depression of the first 7 pages, page 8 gave me the words I was looking for, " Whilst IOSS is not a mandatory scheme, there are many benefits of registration" .

That statement was music to my ears and will do just nicely. I will just keep doing what we are doing now and forget IOSS.until the next hurdle is erected.

Dave

Here is the document: EU_Vat_Doc.pdf

[sulis]

We are mainly using royal mail and send packages both above and below the 150 euros limit. Royal Mail are suggesting using their PDDP (postal delivery duty paid) service when it is ready. It uses Aura API by Hurricane in the checkout to calculate correct tax and duty (if any). Royal mail would bill us later for the tax and duty along with 50p per package handling. Is this something that can work with Sellerdeck?
Mark Faulkner

[Mike Hughes]

I'm sure it can work but will probably need some development effort.

The Aura API will need the product details including HR6 code which I don't think is normally available in the checkout, plus you're going to need some way of feeding the resulting charge back into sellerdeck that it's happy with and doesn't try to override.

[Mantra]

Will the Aura API be integrated with Royal Mail Click and Drop?

Royal Mail Click and Drop appears to be integrated with many online selling market places but Sellerdeck does not get a mention - so has any development taken place to address this?

I understand Royal Mail Click and Drop can be used to produce CN22 and CN23 custom declaration labels from interfaced data tables as well as postage address labels and Sellerdeck BREXIT patch releases now includes product variables for HR (tariff) codes and country of origin to show on EU Invoices and guidance has recently been given on how to set different VAT rates that apply for various EU member states so it appears that all the data fields likely to be needed to produce name/address labels, EU VAT Invoices, CN22/CN23 customs declarations, EORI numbers etc. are already catered for.

The Aura API development for PDDP by Royal Mail looks promising and I would be interested to know if Sellerdeck or perhaps Codepath are considering developing an 'add on' to interface with Royal Mail Click and Drop/Aura API?

[Mantra]

We are mainly using royal mail and send packages both above and below the 150 euros limit. Royal Mail are suggesting using their PDDP (postal delivery duty paid) service when it is ready. It uses Aura API by Hurricane in the checkout to calculate correct tax and duty (if any). Royal mail would bill us later for the tax and duty along with 50p per package handling. Is this something that can work with Sellerdeck?
Mark Faulkner

Royal Mail PDDP appears that it may not cater for B2C packages below 150 Euro limit - see link below:

https://www.royalmail.com/business/i...ties-paid-ioss

[Mariner]

Royal Mail PDDP appears that it may not cater for B2C packages below 150 Euro limit - see link below:

https://www.royalmail.com/business/i...ties-paid-ioss

The Royal Mail PDDP services (only available for limited destinations at present) appear to be OK for B2C either above or below the 150 Euro limit, at least if the information provided to us by our account manager is correct! However, they only 'recommend' use of these services for orders over EUR 150. I suspect the reason for this recommendation is the way in which they arrange to collect the payment. You could end up receiving a lot of small invoices from the Royal Mail, one for each package sent, I think. Excerpt from the message sent from our account manager:

Costs and Billing:

• Service rate card for both Tracked and Untracked options attached – please note: prices include the temporary air carrier supplement; however do not include the 6.5% international surcharge.
• The services are invoiced as normal on your regular Royal Mail invoice.
• Once items have cleared overseas customs, the VAT + duties owed + 50p handling fee (not included in rate card) are charged back to you via a separate summary invoice*.
• VAT is charged at the rate in the destination country e.g. 21% in Belgium. This VAT invoice should match with what you, as the sender, have charged the recipient in the EU, as determined by the landed cost calculator (see below for more info on the landed cost calculator).
• *The invoice will show a summary level view of any charges and line item level detail can be viewed via the e-invoicing portal.

We haven't had the opportunity to consider registering for IOSS yet due to pressures of work so our European customers are having to deal with the DDU services and the hassle involved there at present. Quite a few issues encountered, as you might imagine.

In the longer term, many of our smaller overseas orders come through ebay and will therefore go using ebay's IOSS number so not sure if our own IOSS registration will be feasible. The Deloitte arrangement with the Royal Mail seems exceedingly espensive and the Taxamo link where you pay a flat £2.00 rate for each package also requires API link up with your shopping cart. A lot depends on how much an intermediary would charge to provide their service as to whether or not registering for IOSS ourselves will be feasible.

Ultimately, whatever happens, the IOSS will lead to significant additional costs which we would have to push on to the postage prices for the customer, but it would still be cheaper than the VAT + customs clearance charges they currently pay. Belgium's charge for customs clearance costs well over EUR 20.00 per packet, for example! Most are just a handful of Euros, however.

I'm still waiting for details of the DDP services available from DPD because our account manager is utterly useless, doesn't answer his phone or respond to e-mails. Plus ça change, as they say across the channel.

As we sell books and a handful of DVDs, the majority of our sales are at reduced VAT rates on the continent (no VAT in the UK on books, of course) so there is no duty for most orders. Calculation of the VAT due should be pretty straightforward in our case. However, it would be helpful to discover what Sellerdeck plan to do to assist with IOSS. I would imagine that manually entering the shipment information in Click and Drop should provide all the required customs data for the Royal Mail to calculate the corect fees due via their PDDP system so not sure if Aura integration would be required for us given the moderate volumes of EU business which come from our own customers and not through ebay.

[sulis]

As Mariner reports, it looks like Royal Mail PDDP is available at the moment for all values of sales into France, Germany, Holland, Cyprus, Malta, with more countries being added.

As a manufacturer, nearly all our products qualify for UK origin status. HMRC confirm that all goods of UK & EU origin trade into the EU free of duty.
For small shipments (under 500 euros) sellers can use a waiver and self declare origin (as long as not a commercial import- I take that to mean wholesaling rather than retailing?)
With no duty to be charged this greatly simplifies the situation as far as Sellerdeck goes.

We are going to give PDDP a go.

[Josh Barling]

Thank you for sharing your research - its very useful.

We are close to releasing detailed information and instructions on the current options, as well as investigating future options.

Thanks, Josh