IOSS for Shopify: Enhancing Cross-Border Sales 2024​

In the realm of online retail, Shopify stands as a beacon of simplicity, but where does IOSS fit into this ecosystem?

The Import One-Stop-Shop (IOSS) is a transformative tool, yet, its integration with platforms like Shopify demands a closer examination by e-merchants.

Setting up IOSS for Shopify sellers in a seamless manner may seem complicated, but with the right guidance, it can be easily accomplished.

As an eCommerce business selling to Europe, it is essential to understand and comply with the new Import One-Stop Shop (IOSS) regulations. IOSS allows online sellers to collect and remit VAT for goods valued under €150 that are sold to customers within the European Union (EU). The IOSS system simplifies the VAT process and ensures a smooth cross-border selling experience.

To set up IOSS on your Shopify store, begin by ensuring that your business is eligible for IOSS registration. Once eligible, you can register with an IOSS Intermediary, such as EAS, and obtain an IOSS number. This number serves as a unique identifier for your business, enabling you to properly collect and report VAT on qualifying purchases.

To set up IOSS on your Shopify store, begin by ensuring that your business is eligible for IOSS registration. Once eligible, you can register with an IOSS Intermediary, such as EAS, and obtain an IOSS number. This number serves as a unique identifier for your business, enabling you to properly collect and report VAT on qualifying purchases.

Next, integrate the IOSS number into your Shopify store’s checkout process. You can do this by using the EAS IOSS app or by manually adding the IOSS number to your store’s tax settings. By providing the IOSS number, you inform customers that the VAT has been included in the purchase price, eliminating any unexpected import fees or delays.

In addition to integrating the IOSS number, it is crucial to correctly calculate and apply the appropriate VAT rates for different EU countries. Shopify provides tools and resources to help you automate tax calculations based on customer location, reducing the risk of errors and ensuring compliance with each country’s VAT rules. EAS offers free of charge configuration service for all its customers.

By following these steps and staying informed about any updates or changes to IOSS regulations, you can seamlessly set up IOSS for your Shopify store. This allows you to provide a smooth buying experience for your customers within the EU while ensuring compliance with VAT requirement

With EAS you can fully automate your IOSS compliance from IOSS registration, to Shopify configuration and reporting and filing. Start by registering today, and you’ll be up and running within two days.


Understanding IOSS for Shopify Merchants

Shopify provides a robust platform fostering simplicity in global e-commerce operations, yet IOSS nuances demand additional attention from merchants. As e-commerce grows, so does the need for harmonised tax collection, to which IOSS provides a solution, easing cross-border sales for Shopify shoppers in Europe. Shopify, although feature-rich, does not inherently support IOSS; this necessitates merchants to seek external expertise to leverage IOSS benefits.

Intricacies of the IOSS system can be daunting, but with the right guidance, Shopify merchants can seamlessly integrate this VAT scheme. The key is understanding that IOSS simplifies VAT obligations for sales under €150, making a once convoluted tax process remarkably straightforward. Registering for IOSS, albeit necessary for non-EU merchants, introduces another layer of complexity that requires an intermediary’s assistance for compliance.

Embracing IOSS can propel a Shopify store’s appeal and efficiency in the EU market. Transparency in pricing alongside simplified customs procedures instils buyer confidence and expedites transactions, a significant upside for Shopify merchants aiming to thrive in a competitive international landscape.


Benefits of IOSS

Using IOSS (Import One-Stop Shop) offers several benefits for e-commerce businesses selling to Europe:

  1. Simplified VAT Collection: IOSS streamlines the process of collecting and remitting VAT for goods delivered from outside the EU to EU end customers. It ensures that the VAT is paid at checkout, eliminating surprise fees for customers upon delivery.
  2. Enhanced Customer Experience: IOSS improves customer satisfaction by providing transparency in costs. Customers do not need to deal with local customs or face unexpected fees, as everything is paid upfront. This can lead to reduced returns and increased customer loyalty.
  3. No customs handling fees: Customs handling fees do not apply to IOSS deliveries. Without IOSS your customers face an extra charge of 5€ to 35€ per EU order.
  4. Faster and Cheaper Deliveries: IOSS facilitates simplified customs processes and centralised clearance, allowing for faster and cheaper deliveries. Clearance can be done at any EU country instead of the destination country customs, resulting in shorter delivery times and lower costs.
  5. Freedom to Choose Logistics Operators: IOSS is not tied to any specific logistics operator, giving you the freedom to choose your preferred delivery partners. Many common logistics operators for Shopify have the capabilities to handle IOSS numbers and shipments.

Overall, using IOSS improves the buying experience for customers, reduces costs, and ensures compliance with VAT regulations. It can give your Shopify store a competitive edge in the EU market.


The Essentials of IOSS Registration

Registering for IOSS is crucial for non-EU merchants desiring sleek transactions with EU consumers. It demystifies VAT compliance for low-value consignments and provides a competitive advantage. A designated intermediary is essential to facilitate the registration and ongoing compliance process.

To utilise IOSS, Shopify merchants must understand the eligibility criteria and integrate IOSS procedures within their checkout systems. This incorporation guarantees VAT is collected at the point of sale, ensuring a frictionless customer experience. Partnering with a trusted intermediary, such as EAS, streamlines this integration.

IOSS registration enhances the EU customer’s purchase journey by eliminating unexpected costs.

By aligning with IOSS, Shopify sellers not only adhere to EU tax regulations but also gain the ability to display all-inclusive prices. Transparency at checkout, facilitated by IOSS, correlates with customer satisfaction and loyalty, which are paramount for sustained success in the EU market.


Identifying When to Use IOSS for EU Sales

Discerning the optimal circumstances for IOSS integration is pivotal in streamlining VAT management for EU sales.

  • Orders dispatched from a non-EU country to a customer in the EU.
  • Each product’s intrinsic value, excluding taxes and shipping, is less than or equal to €150.
  • Transactions are business-to-consumer (B2C), excluding business-to-business (B2B) sales.
  • The merchant is registered for IOSS, either directly (for EU-based companies) or through an intermediary (non-EU companies).
  • Desire for expedited customs clearance and delivery processes.
  • Commitment to transparent billing, with all VAT charges included at the checkout stage.

If your shipment matches these criteria, IOSS serves as the ideal solution.

Implementing IOSS is a testament to prioritising customer clarity and satisfaction in the EU market.


Integrating IOSS Into Your Shopify Store

Incorporating IOSS into your Shopify store is a quintessential step for any e-commerce enterprise aiming for expeditious and efficient entry into the EU market. The integration process initiates with the acquisition of an IOSS registration number, which is applied during the checkout phase, ensuring the correct VAT is calculated and collected from your EU customers at the point of sale.

To implement IOSS in your storefront, you first need to ensure compatibility with your current logistics setup, as well as compliance with the reporting obligations that IOSS necessitates. This may involve configuring your Shopify settings to handle VAT calculations correctly and establishing a system for the monthly IOSS reporting required by the EU tax authorities. Moreover, aligning your shipping processes with IOSS regulations is critical, as it will enable smooth customs clearance and an enhanced overall customer experience. As an EAS customer, you will be guided through the whole process.


Setting Up IOSS on Shopify Checkout

Integrating IOSS into your Shopify checkout streamlines VAT handling for your EU customers.

  1. Obtain an IOSS registration number through an IOSS intermediary service like EAS.
  2. Install the compatible Shopify app provided by your IOSS intermediary to automate VAT calculations.
  3. Input your IOSS number into the Shopify app to ensure proper tax collection during checkout.
  4. Configure your product prices to reflect whether VAT is included or to be added at checkout.
  5. Adjust your shipping settings on Shopify to align with IOSS requirements for eligible orders.
  6. Test the checkout process to verify that the IOSS number is correctly applied and VAT is accurately assessed.Seamless checkout is vital for customer trust and retention.The correct setup ensures compliance, swift deliveries, and a transparent purchasing process.

Choosing Compatible Logistics Partners

Selecting the appropriate logistics partners is essential for leveraging the full benefit of IOSS integration within your Shopify environment. The fidelity of these services can significantly impact delivery times and customer satisfaction.

Ensure your chosen courier supports IOSS delivery and reporting. This alignment helps expedite the customs clearance process succinctly. Most of the couriers and postal operators support IOSS deliveries.

Your logistics partner must have a well-established procedure for handling IOSS shipments to guarantee that your goods will be processed swiftly and accurately upon reaching EU borders. It is paramount they have structures in place to correctly manage and convey IOSS information, thus avoiding delays or complications.

To find the most suitable logistics partner, consider their experience with e-commerce transactions within the EU and most importantly, their proven track record of handling shipments under the scheme. A robust logistics partner will be well-versed in facilitating IOSS procedures, ensuring that your products are delivered with the utmost efficiency and compliance. EAS recommends using DHL, Royal Mail and other well-established service providers.


Calculating IOSS Thresholds Accurately

Precision in determining the IOSS threshold is essential for compliance and customer transparency. For products with VAT included in their price, this involves deducting VAT to find the intrinsic value prior to reaching the 150€ threshold, which varies across EU member states. Missteps in this calculation could lead to incorrect VAT collection, affecting customer charges and potential liabilities.

Correct threshold application is critical to avoid the pitfalls of under or overestimating your obligations. Remember, the threshold applies to the value of goods excluding VAT and shipping; ensure this is thoroughly assessed to safeguard against unnecessary complications arising with EU tax authorities.

EAS helps you to set up automatic IOSS Threshold calculation to your Shopify Store.


Inclusive vs Exclusive VAT Pricing

When setting your prices, you’ll need to decide on using either inclusive or exclusive VAT pricing. Inclusive pricing means VAT is already factored into the displayed price.

In contrast, exclusive VAT pricing delineates a clear separation between the product price and the added tax. Here, the price shown to the customer is without VAT, which is then calculated and added during checkout. This approach is not common way of displaying prices within European Union..It may lead to higher perceived costs at the point of payment, potentially impacting purchasing decisions.

Inclusive pricing, is more straightforward, your customers know the final price or your products from the very moment they land on your website. From data EAS has collected, this approach is giving better checkout conversion.

To summarise, the choice between inclusive and exclusive VAT pricing is not trivial. It impacts both customer perception and business operations. Inclusive pricing simplifies the initial customer experience. Exclusive VAT pricing ensures the tax is clearly outlined for the end customer but may create a sticker shock when the additional costs are tallied at checkout, affecting overall purchase satisfaction.


Applying the 150€ Threshold to Your Products

Accurately applying the 150€ IOSS threshold necessitates an understanding of VAT-inclusive and exclusive pricing for your products.

  1. Identify VAT Method: Determine if your product prices are inclusive or exclusive of VAT, which impacts the threshold calculation.
  2. Calculate VAT-Exclusive Price: For inclusive pricing, extract the VAT to find the VAT-exclusive cost using the formula: Price / (1 + VAT rate).
  3. Assess IOSS Eligibility: Compare the VAT-exclusive price with the 150€ threshold to confirm if the order qualifies for IOSS. For VAT-exclusive pricing, simply verify that the pre-tax product price stays below the 150€ limit. Remember, this threshold applies per order, not per item, factoring the cumulative value of goods in a single transaction.

Finding and Working With an IOSS Intermediary

The choice of an appropriate IOSS intermediary is instrumental for non-EU entities aspiring to streamline their sales into the European Union. The intermediary acts as a fiscal representative, navigating the complexity of VAT registration, collection, and reporting on your behalf. Their expertise and reliability are paramount; hence, meticulously assess their reputation, capabilities, and compatibility with your business model.

Securing a proficient IOSS intermediary can dramatically enhance your operational efficiency and compliance with EU tax regulations. Trustworthiness and comprehensive service offerings should guide your selection, ensuring seamless integration with your existing eCommerce ecosystem and the full utilisation of the IOSS framework for a frictionless customer experience.


Selecting a Reliable IOSS Service

Choose your IOSS intermediary with discernment.

When researching potential IOSS intermediaries, it’s imperative to consider several key factors. Firstly, verify the expertise and track record of the service provider. A reliable intermediary should have a robust understanding of EU VAT legislation and the specific needs of eCommerce entities. Moreover, they should have a proven history of assisting companies with the seamless implementation of IOSS and addressing any complications that arise. You can read what EAS customers are saying about us at Shopify App Store

Ensure technical integration is seamless.

A proficient intermediary will facilitate an effortless technical integration. They should offer bespoke solutions that align with your Shopify store, simplifying the IOSS registration and reporting processes. This integration is crucial to maintain the efficiency of your eCommerce operations and to ensure VAT compliance across the EU.

Assess support and customer service quality.

Evaluate the intermediary’s customer support infrastructure. Even with an effective technical system in place, you will encounter scenarios where you require personal assistance or advice. The best service providers offer prompt and knowledgeable support that helps you navigate the complexities of cross-border VAT management.

Regular compliance updates are vital.

It’s necessary to ascertain that your intermediary stays abreast of the latest regulatory changes and that their systems are updated accordingly. The dynamic nature of tax legislation in the EU means that your business must remain compliant with the most recent VAT rules, and a capable IOSS service provider will ensure this, safeguarding your business against potential non-compliance issues.


EAS Integration and Its Advantages

EAS is the leading and highest rated IOSS solution for Shopify, trusted by thousands of Shopify Merchants. With EAS, you can achieve full automation for EU and UK VAT compliance.

Streamlined IOSS Management enhances your approach to fulfilling EU VAT obligations through EAS integration. It ensures a seamless operational flow within your digital storefront.

The EAS Shopify App augments your platform’s capabilities, allowing for quick IOSS number incorporation, VAT calculations and simplifying fiscal responsibilities without disrupting user experience or backend processes.

Comprehensive Support Structure provided by EAS ensures real-time assistance, vital for efficiently navigating the nuances of IOSS regulations and for providing peace of mind.

Advanced Automation Technologies within EAS reduce manual input errors, accelerate VAT reporting accuracy, and ultimately optimise the financial operations of your European transactions.

Automated VAT corrections in case of returns and post-purchase discounts. EAS identifies automatically if your EU order has been returned, and corrects your IOSS report. With EAS, you never have to pay taxes for returned items.

Leverage EAS’s integration to enhance customer satisfaction and bolster confidence in your EU market presence with full VAT compliance and uncomplicated payment processes.


IOSS FAQ for Shopify Merchants

Here are some frequently asked questions about IOSS for Shopify merchants:

What is IOSS and why is it important for Shopify merchants in Europe?

IOSS stands for Import One-Stop-Shop, and it is a system that simplifies VAT obligations for cross-border sales under €150. It is important for Shopify merchants in Europe because it allows for seamless international transactions, improved customer experience, and compliance with EU tax regulations.

Does Shopify natively support IOSS?

No, Shopify does not natively support IOSS. Merchants need to seek external expertise, such as an IOSS intermediary like EAS, to integrate IOSS into their Shopify stores.

What are the benefits of integrating IOSS with Shopify?

Integrating IOSS with Shopify offers benefits such as transparent pricing for EU customers, simplified customs procedures, faster delivery times, improved buyer confidence, and increased efficiency in the EU market.

How do I register for IOSS as a non-EU merchant?

To register for IOSS, you need to work with an IOSS intermediary like EAS. They will assist you in the registration process and ongoing compliance, ensuring smooth transactions with EU consumers.

When should I use IOSS for EU sales?

You should use IOSS for EU sales when the following criteria are met:

  • Orders are dispatched from a non-EU country to a customer in the EU.
  • Each product’s intrinsic value, excluding taxes and shipping, is less than or equal to €150.
  • The transactions are business-to-consumer (B2C) sales.
  • You are registered for IOSS, either directly or through an intermediary.
  • You desire expedited customs clearance and delivery processes.
  • You are committed to transparent billing, with all VAT charges included at the checkout stage.

How do I integrate IOSS into my Shopify store?

To integrate IOSS into your Shopify store, you need to:

  1. Obtain an IOSS registration number through an IOSS intermediary like EAS.
  2. Install the compatible Shopify app provided by your IOSS intermediary for automated VAT calculations.
  3. Input your IOSS number into the Shopify app to ensure proper tax collection during checkout.
  4. Configure your product prices to reflect whether VAT is included or added at checkout.
  5. Adjust your shipping settings on Shopify to align with IOSS requirements for eligible orders.
  6. Test the checkout process to verify correct application of the IOSS number and VAT assessment.

How do I calculate IOSS thresholds accurately?

To calculate IOSS thresholds accurately, you need to:

  1. Identify if your product prices are VAT-inclusive or VAT-exclusive.
  2. For VAT-inclusive pricing, deduct the VAT to find the VAT-exclusive price.
  3. Compare the VAT-exclusive price with the €150 threshold to determine IOSS eligibility

What’s the difference between IOSS and OSS?

IOSS (Import One-Stop-Shop) and OSS (One-Stop-Shop) are both VAT collection and reporting solutions, but they have different scopes and purposes.

IOSS specifically applies to goods delivered from outside of the EU to EU end customers. It is designed for B2C (business-to-consumer) transactions and is used for orders with a value under 150€. IOSS allows sellers to collect, declare, and pay VAT at the point of sale, providing a simplified customs process and improving the customer experience.

On the other hand, OSS is a broader system that applies to intra-EU sales of goods and services. It is used for both B2C and B2B (business-to-business) transactions. OSS allows sellers to declare and pay VAT for all their EU sales in a single EU member state, simplifying the VAT compliance process for cross-border transactions within the EU.

In summary, IOSS is specifically for non-EU sellers delivering goods to EU customers, while OSS is for sellers operating within the EU and making sales within the EU.

What if I use marketplaces?

When selling through a marketplace, such as Etsy or Amazon, you do not need to obtain an IOSS number yourself. Marketplaces or electronic interfaces are responsible for VAT liabilities in these cases. Therefore, it is the marketplace’s IOSS number that should be used when the sale is generated through a marketplace. EAS always recommends having your own online store, for higher margins, brand-building purposes and creating stronger customer relationships.

Does Shopify use IOSS?

Shopify, as an eCommerce platform, does support IOSS (Import One-Stop Shop).

Shopify merchants are required to register for IOSS with a third-party solution provider. As the market leader in IOSS compliance, EAS offers comprehensive solutions for IOSS registration. Our monthly plans always include IOSS registration, ensuring that you can easily meet the necessary requirements for selling to EU customers.

Is an IOSS number free?

IOSS registration is always included in all our EAS plans. See EAS pricing here

Where can I get IOSS number?

All you need to do is to register with EAS and you have an IOSS number almost immediately! Start the process here

Is there a minimum or maximum overall threshold for IOSS?

No, even tho there is misinformation online about 10,000€ threshold with IOSS. Every single consumer item sent to EU is VAT taxable. If you do not handle the compliance, your customers would have to do it instead. If the compliance is left for the consumer, customs delays and customs handling fees apply.

Picture of Robert Ruutsalo

Robert Ruutsalo

Chief Revenue Officer @ EAS