EU (European Union) is marking big changes on VAT rules which take effect from July 1st, 2021. HyperSKU has been in communication with relevant partners to align with the change, run compliant business and ensure smooth dropshipping fulfillment.

What are the changes?

1. Distance selling threshold will be withdrawn. VAT rate will be based on the buyer’s country.

2. There will be a new EU-wide threshold of 10,000 euro for micro-business. Sellers with sales less than 10,000 EUR in each of the past two years can charge the VAT rate of the EU country where shipment originates.

3. The OSS (one-stop shop) system will simplify VAT taxation as sellers are free from registering in multiple countries.

What does it mean for Shopify sellers?

There will be two major changes on Shopify stores from July 1st 2021:

1. Shopify will automatically update tax settings to charge the VAT rate of the buyer’s shipping country for sales within the EU. This will be done at point of sale.

2. Shopify requires sellers who has business in EU to update VAT settings and provide VAT number if you have EU customers.

Policies from logistics partners to comply with New VAT rules

All HyperSKU users selling to EU must charge and report VAT via new Import One-Stop Shop (IOSS).

To comply with new VAT rules, all orders fulfilled and shipped by HyperSKU to EU must associate with IOSS number; Our logistics partners reject to ship parcels without IOSS number.

The sole shipping option to process orders without IOSS is ePacket. your customer will be contacted to pay for VAT when the parcel arrives at customs. This ends up in longer processing time and less pleasant shopping experience.

IMPORTANT – Actions for HyperSKU clients

From June 26th 2021, all orders shipped to EU member countries are required to have IOSS number(s) for customs clearance. Parcels without IOSS numbers won’t be shipped out.

Selling to EU with your own IOSS number

1. Register for IOSS

  • If your business is based in EU, you can register businesses on the IOSS portal of any EU Member State.

  • If your business is not based in EU, you need to appoint an EU-established intermediary to fulfill the VAT obligations under IOSS.

2. Provide IOSS number to HyperSKU

a. Please log into your HyperSKU account, go to upper right Settings > Preferences > Payment & Logistics

b. Tick ‘Advanced Setting’. You may set different IOSS number per store. Select store, and make sure to choose ‘EU member states’

c. Enter your IOSS VAT number. Click ‘Save’.

3. File and submit VAT monthly via IOSS

*This applies to all HyperSKU-branded shipping, including HyperSKU Standard Shipping, HyperKU Economy Shipping, HyperSKU VIP Shipping, and HyperSKU Liquid Shipping.

Selling to EU with 3PL’s IOSS number

If you don’t have IOSS number and find it difficult to register for one, HyperSKU can have our logistics partners to be the collector and payer of the required VAT. You need to pay HyperSKU additional 30% of the product cost when paying for the order. This is the default setting and no action is required from your end.

Example: As dropshipper, Jane wants to use the IOSS number of HyperSKU’s 3PL for custom clearance. To fulfill an order to Germany, HyperSKU charges Jane 10 EUR for the product, and 5 EUR for shipping. Then Jane needs to pay extra 10 EUR * 30% = 3 EUR. In total, Jane needs to pay 18 EUR to HyperSKU to fulfill the order.

*This applies to all HyperSKU-branded shipping, including HyperSKU Standard Shipping, HyperKU Economy Shipping, HyperSKU VIP Shipping, and HyperSKU Liquid Shipping.

Selling to EU without IOSS number

If you choose to move forward without IOSS, your customer will be contacted to pay for VAT when the parcel arrives at customs. This ends up in longer processing time and less pleasant shopping experience.

ePacket is the only shipping option for non-IOSS fulfillment. Customer’s accurate address and phone number are mandatory. HyperSKU does not offer refund or reshipment if end-customer refuses to pay for VAT.

For more information:

https://ec.europa.eu/taxation_customs/business/vat/ioss_en

https://ec.europa.eu/taxation_customs/sites/default/files/member_states_oss_contact_details.pdf

https://ec.europa.eu/taxation_customs/business/vat/resources_en

https://www.shopify.com/blog/eu-vat-changes-2021

*The information provided does not, and is not intended to provide comprehensive legal and/or tax advice. Readers should consult a tax professional or their local taxation authority for legal advice. HyperSKU is neither marketplace nor facilitator. HyperSKU is only responsible for passing relevant information to logistics partners for necessary customs procedures. HyperSKU users are responsible for their own tax obligations and liability.

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