External News, Article

Duty & Tax Collection

Plusius and CBIT: IOSS VAT Collection and Settlement

January 25. 2023

Time to read: 3 min

Starting July 1st, 2021, VAT (sales tax) has charged E-commerce and direct to customer goods below 150€ imported into the EU, regardless of value.

The European Import One-Stop-Shop 
European authorities have rolled out the European One-Stop Shop to help consumers pay VAT (sales tax) at the point of sale. Duties and taxes were due formerly on all products above approximately 23€. The European Commission has removed this threshold and now asks for taxes on all goods under 150€.

European VAT (sales tax) can either be charged at the time of the sale by using the new Import One-Stop-Shop (IOSS), or be collected from the end-customer by the customs declarant (transportation company or broker).

What is the benefit of using the One-Stop-Shop
European authorities recently published projected fees of 7-15€ for shipments not entering the EU through the One-Stop-Shop (IOSS). Customers who do not have an IOSS intermediary will receive a surprise tax bill after the delivery or have the delivery held at customs until the VAT (sales taxes) and fees are paid.

Crossborderit, an IOSS authorized intermediary representing today (January 2022) more than 400 merchants, took over the mission of helping merchants exporting to the EU with classification, calculation, collection, and customs settlement of IOSS VAT.

How does it work in practice?
VAT is calculated and collected in the e-commerce checkout along with any fees. The intermediary (Crossborderit) then escrows and settles directly with the European Tax Agencies. All this is created for you - as a merchant exporting cross-border - to have your customers receive packages faster and less expensive, to keep your business outside the risks by staying compliant with the tax regulations, to settle the taxes through your tax intermediary in the EU: Crossborderit, and, guess what? Even the courier company would get the items shipped without friction, having no packages waiting at the border but direct transportation.

The supply chain then becomes smoother
Because Crossborderit supports merchants with the capability to display the total landed costs in the checkout. With a simple calculation, you visualize all import fees before payment in a seamless global shopping experience.

In fact, this allows merchants to pass the Sales tax onto the customer in compliance with the new rules.

Having web-shops displaying the total landed costs at checkout, merchants end to pay zero taxes as the customers pay their own taxes in their own country.

Damon Baca, the Co-Founder and US CEO of Crossborderit has shared:
“Displaying total landed cost reduces your cart abandonment. We are happy to be of support to merchants with IOSS entries and compliance that so far has been demonstrated to be easy and business-friendly.”

Plusius is helping Crossborderit in its mission to collect funds in multiple currencies, escrow, reconciliation, and pay-outs settlement with the Tax Agencies in the EU. With Plusius, there are zero risks for the merchants as taxes are collected and held. Not to mention that there are no risks for the IOSS intermediaries, funds are securely escrowed before having to pay the government tax agencies.

The IOSS VAT intermediaries partnering with us are running a safer and frictionless business. If you are a merchant exporting to any of the EU member states, find us for recommendations of IOSS intermediaries integrated with Plusius for smarter cross-border payments.