Starting July 1st, 2021, all goods shipped to the United Kingdom (UK) and the European Union (EU) are subject to Value Added Tax, or VAT, regardless of the price of the goods in the shipment. You can use the Avalara VAT Risk Assessment tool to find out if your company will need to be VAT registered.
VAT is a tax applied to a product whenever value is added at any stage in the supply chain—from production to the point of sale. The cost of the VAT that is paid is based on the cost of the product, minus any of the costs of materials used in the product that has already been taxed.
The IOSS (Import One-Stop-Shop) allows suppliers and merchants selling imported goods to customers in the EU to collect, declare, and pay the VAT to the tax authorities, instead of making the buyer pay the VAT at the moment the goods are imported into the EU as it was previously the case (for products over 22 EUR). You can use the IOSS to cover VAT fees for consignments of up to €150.
Supported Carriers and Tax ID Types
This list will be updated as support for more carriers is added.
- UPS: IOSS, and VOEC (a tax ID type for shipping to Norway)
- UPS One Balance: IOSS, and VOEC (a tax ID type for shipping to Norway)
- USPS: IOSS
- FedEx: IOSS, VOEC, EIN, EORI, VAT
- DHL Express: IOSS, VOEC, EIN, EORI, VAT
- DHL eCommerce: uses their own encoding for tax id types: EORI will appear as “EOR”, IOSS and VOEC ids will both appear as “SDT“.
- Global Post: IOSS
- RR Donnelly: IOSS, VAT, EORI
- Ascendia: IOSS, VAT, EORI
- APC: IOSS, VAT, EORI
- Globegistics: IOSS, VAT, EORI
Shipping to the European Union (EU)
EU law requires that the standard VAT rate must be at least 15% and the reduced rate at least 5% (only for supplies of goods and services referred to in an exhaustive list). The actual rate will vary between EU countries. View the country-specific VAT authority for more information on the rates.
Most eCommerce marketplaces will have an IOSS number that can be used to apply the correct VAT at the time the order is placed. Reach out to your marketplace to receive this number.
ShippingEasy provides a place for UPS merchant accounts to enter their IOSS numbers on the INTERNATIONAL SETTINGS page.
Shipping to the United Kingdom (UK)
As a U.S. online retailer, you will now be required to create an online account with Her Majesty's Revenue and Customs (HMRC) and register for a VAT number in order to deliver e-commerce orders to the UK. You will be required to collect all VAT fees from your buyers at the time of product purchase. This VAT fee was previously collected when a parcel entered the UK, typically with the buyer having to pay VAT to release the package from Customs. Read more about shipping to the UK.
- The VAT tax standard rate is 20% - VAT rates vary and are dependant on the product price.
- Online Marketplace, or OMPs, selling to customers in the UK are responsible for collecting VAT from customers. If you sell goods through an OMP, you do not need to use your UK VAT number or charge the VAT.
- If goods being sold are already in the UK at the point of sale, the OMP making the sale is now responsible for the VAT.