This US seller is unhappy with the VAT handling for shipping to EU countries

MrPetovan

I'm based in the US and a couple days ago I received an order from Italy. I'm used to EU orders in general but this was the first I received on BrickOwl.

First hurdle was the IOSS. I'm using the free Shipstation integration with a Paypal account which doesn't allow adding a Tax ID to the customs declaration. No problem, there are forms for this. Not on BrickOwl apparently, according to https://www.brickowl.com/forum#/discussion/comment/66633

So it was painstaking to make my own form, but then looking at the order numbers, I realized that my buyer didn't pay the VAT, I did! This means that the price I set for my lots are seemingly tax-free for domestic shipping within the US (no tax is reported being paid on the order), but tax-included for the EU?

Since I can't set a different price for every single country with their varying VAT rate (not that I would do it even if it was possible), I've decided to not bother shipping internationally on BrickOwl, between the administrative hassle and the plain ripoff, it's not worth it for me, even if I don't sell LEGO for a living. I can't imagine what it must be like for people who actually do.

US sellers beware!

Lawrence

With regards to tax payment, there is some information here https://www.brickowl.com/help/import-tax. The customer has paid the IOSS tax to your store.

With regards to the customs, the information does need to be submitted digitally. There is a help page here https://help.shipstation.com/hc/en-us/articles/360025869952-Customs-Declarations . It looks like the IOSS ID goes into "tax identifiers"

MrPetovan

Hi Lawrence and thanks for the reply. However the customer didn't pay extra for tax. Instead, the order total and the shipping fees get retroactively reduced.

For a $50 order with $40 shipping, the PayPal order shows that the order total submitted by BrickOwl was actually $41 and shipping was $33, with $16 tax added, with a total including tax equal to the original lot price + quoted shipping fee.

However from the same PayPal screen it looks like I'm receiving the $16 tax amount myself, which looks wrong, the Italian government should have perceived that tax, and I'm not in contact with it. The IOSS number isn't mine either. So it's entirely possible BrickOwl might get in trouble owing back dues at some point, but I'm definitely not an international tax expert.

Regarding to the customs, the free Shipstation integration with any PayPal account has reduced features which don't allow to set a tax identifiers. See https://help.paypal.shipstation.com/hc/en-us/articles/6035375445403-How-does-the-EU-VAT-Reform-impact-my-international-shipments for the specific help article regarding this integration:

"If you ship to a country that charges VAT on imported goods, the recipient pays these charges to the carrier when receiving the shipment. You (the shipper) cannot prepay these fees."

Ironically, if my Italian buyer ends up paying $16 tax again on reception of my parcel despite the homemade form I added to the package, they will have finally paid the correct VAT amount to the correct recipient, despite having been wrongly told by BrickOwl that they already paid it.

paulvdb

I can't answer all of your questions, but the way the VAT payment works for these orders is as follows: The buyer will pay you the order total including VAT. When Brick Owl charges your monthly fees they also include any VAT that you collected on their behalf. Brick Owl will then pay the VAT to the relevant tax authority.

Lawrence

If you go to the actions tab on the order, you can then access the invoice. You will see that your price for the item is $42, the customer has paid the tax on top of that price. The customer has paid the tax to your store. Your store will then pay the tax to Brick Owl.

With Shipstation, if you are saying you are unable to set an IOSS tax identifier, then certainly you cannot use that. You may want to use USPS directly.

To clarify, the IOSS must be handled correctly, and the Italian customer must not be left to pay the customs charges to their customs authority, as there will be additional handling charges on top of this, and the store would be responsible for resolving this. The IOSS number must be sent digitally, any written information attached to the package is usually ignored.

minithingsforlife

according to shipstation website you can add Tax IDs
https://www.shipstation.com/blog/ioss-vat-taxes/

MrPetovan

> You will see that your price for the item is $42

Yes. This is not the price I originally set for my lot and part of what caused my ire. No matter whether I ship to a US address or a EU address, when a lot is $50 and the shipping I set is $40, I should get about $50 net in the end.

Thanks @paulvdb for the explanation to how BrickOwl collects the VAT, it confirms that I will be left with only $34 in the end. Since I received $33 for shipping I paid $40 for (as I quoted the buyer), I'm not even left with $42, which would also be wrong, out of a lot I put for sale for $50.

Even without the unrelated shipping carrier hassle, it isn't worth it for me to sell on BrickOwl to EU buyers. The prices I set for my lot should be before tax, and until they are, the buyer is getting a bargain at my expense.

I taped to my package a printed custom form that informs the VAT has been already collected, we'll see how it goes. I have felt bad in the past for my international buyers who unexpectedly paid import dues, but not in this case since the Italian buyer never paid the expected tax on top of the before-tax prices I set, both for the order and the shipping.

@minithingsforlife The full Shipstation service allows you to add a tax ID, the free PayPal integration doesn't, see https://help.paypal.shipstation.com/hc/en-us/articles/6035375445403-How-does-the-EU-VAT-Reform-impact-my-international-shipments

Lawrence

"Yes. This is not the price I originally set for my lot and part of what caused my ire"

If you go to the invoice view, you can see the full monetary breakdown.

In the lot history, the lot was created via API at $42. "25 Sept 2024 20:17 Lot Created, Quantity 1, Price 42.276, Lot Condition usedc, External ID 432420000"

Similarly, you quoted the customer $33 shipping, "Thank you for your quote request! Estimated package weight: 1lbs 8oz (700g) USPS First Class International Service: US $33.05"

The customer has paid the taxes to your store, on top of your item and shipping prices.

As mentioned, the IOSS must be handled correctly, and the Italian customer must not be left to pay the customs charges to their customs authority, as there will be additional handling charges on top of this, and the store would be responsible for resolving this. The IOSS number must be sent digitally, any written information attached to the package is usually ignored.

Malnaborg

Just reading this, and not writing anything to help you @MrPetovan - I just want to thank you for your trying problems with this. As a buyer and seller from EU i am so happy to read that you actually try to understand this.
Lately i have begun to only buy inside EU because so many sellers have problems with the IOSS not because of brickowl but because the shipping "company" they use are so difficult to work with when doing the tax/vat integrations. But as lawrence writes, you can not write (in hand) anything IOSS related on the package, it needs to be a barcode printed before the local buyer's postservice will accept this.

So i am sad to hear that the shipping method you use do not include this in a free software, as it is a minimum service that needs to be used to send to EU.
Anyway, long post just wanted to thank you for your hard work, and hopefully, you will consider to send to EU in the future :-D

Stellar

I know many US sellers switched to Pirate Ship due to the issue with Shipstation, seems shady gatekeeping a mandatory requeriment for EU shipping behind a paywall...

Brick.Galaxy

We use Pirate Ship and it supports the IOSS without a problem. It's free and easy to use.

We do not yet, however, sell to the EU on BO due to a lack of a few features that BL has. My hope is that BO decides to expand the options as a seller to make things easier to manage, but if not, such is life.

MrPetovan

@Lawrence Thank you for looking into this! The whole time I trusted the order details where the price on the item row is still marked as $51, which I expected to be the price I set before tax. It makes me feel better about this transaction and the overall handling of VAT by BrickOwl, but the shipping carrier hurdle remains, and I'm not doing a big enough order volume to the EU to justify changing shipping provider to a paid one. As a result I'll stay US-only on BrickOwl for the foreseeable future.

@Stellar I can't complain much about the free ShipStation integration with a PayPal account because it is, well, free. So it does make sense that it doesn't offer all the features of a regular paid account.

@Malnaborg So far I've shipped at least half a dozen packages to EU countries using a printed form taped on the package, and none of my buyers have reported having to pay the VAT again. It wasn't on BrickOwl though, not sure how much it changes things.