shipping to the eu: how fedex and kpmg can support you

The EU is making some key changes to its

VAT rules from July 1, 2021. From that date,

the VAT exemption for shipments up to €22

is being eliminated, meaning that all imports

into the EU will be subject to VAT regardless

of their value.

Shipping to the EU:

How FedEx cansupport you

For business-to-consumer (B2C) e-commerce consignments

worth €150 or less, the EU is also introducing an optional Import

One-Stop Shop (IOSS) to provide a more efficient VAT collection

and customs clearance process. Overseas sellers will be able to

charge VAT at the time of sale and remit it to the tax authorities.

They will no longer have to register for VAT in every EU country

they sell in. If the IOSS is not used, FedEx will collect the VAT from

the customer and pay to the authorities in the normal way.

Why use the IOSS?

The IOSS can save your business time and money through

a range of benefits:

• Provide a better experience for your customers (and reduce your

returns) by showing them the full cost of the goods at the time of

purchase, preventing unexpected VAT and handling costs when

the goods are imported.

• Import goods into any EU Member State, regardless of the

destination they are ultimately shipped to.

• Experience a quicker customs clearance process as no VAT is

payable upon importation.

What happens if Idon’t use the IOSS?

The IOSS is not mandatory, but if you don’t use it you could face

additional costs and other complications:

• VAT will be due upon importation into the EU. FedEx will pay

the taxes to the authorities and then recover these from the

receiver (or you as the supplier). An administration fee will apply

for this service. This can either be the Pre-Payment Fee or the

Disbursement Fee (which are part of our ancillary charges).

You’ll face greater restrictions on logistics, as your shipments will

need to be imported and customs cleared in the same EU state

that the final destination is located in.

• You won’t benefit from the administrative and customs clearance

simplifications that the IOSS brings for businesses that use it.

Next steps

To learn more about the IOSSandKPMG’s VAT intermediary

offer – including how to subscribe to the service –

visit www.kpmg-compliance.com. You can also find more

details about the wider changes being made to EU VAT rules

by visit ing our website at fedex.com/euvatchanges.

It is essential that you don’t share your IOSS

number with anyone else, as this could leave

you vulnerable to potential fraud.

How can Iuse the IOSS?

Once you have registered, and have your IOSS number, all you need to do

as a FedEx customer is to include it in your shipment data for any B2C

e-commerce shipments that are valued up to €150. We will then provide this

number to customs via the customs declaration.

If you use our automated shipping platforms, you can enter your IOSS

number when you create your shipment. The details of how to do this

depend on the platform you are using, as shown here.

D o I need to do anything different on

the commercial invoice and Shipping

Label?

Please note, as of July 1, 2021, all shipments / commodities to the EU require

a value for customs and a commercial invoice. Please ensure you show the

true value of the goods in the “customs value field” on the shipping label,

excluding freight and other charges.

For B2C shipments making use of the IOSS it is also recommended to include

the sales price in euros (€) on the commercial invoice to avoid exchange rate

differences at the time of import.

FedEx can only accept an IOSS number via one of our online

automation solutions.

Third Party

Provider

Your own system integrated with our Online

Shipping Tool

Contact your provider and they will supply

the details for your platform.

You may need to adjust the mapping of

your data to the relevant field. If required,

contact your sales representative who will

provide the right set up documentation and

request that someone from our Customer

Technology team contacts you where

appropriate.

Shipping platform Where to enter your IOSS number

http://www.kpmg-compliance.com/

New IT Set Up For IOSS

01 New field for IOSS registration number

02 IT set up document available on request

01

02

Commercial Solution – IOSS, Order value below €150

Process

Customer Completes Retailers Checkout Duties & taxes collected by Retailer

1 Arrival @ FedEx Cross Border Basildon to be processed

2 Transported via T1² Transit document to Venlo, Netherlands

3 Customs cleared at brokerage in the Netherlands

4 Cross docking at FedEx Cross Border Venlo facility

5

Key Points

• Bulk clearance for all items under €150, • No import VAT charged• Simplified clearance with data shared by IOSS system into

final destination authorities• Full suite of final mile providers to provide the best

customer delivery experience

¹ VAT threshold removed as of 1st July 2021²See terms for explanation

VAT Threshold €0¹/ Duty Threshold €150

Copyright® FedEx 2021 5

FedEx Cross Border Linehaul from Venlo to Final Mile Carriers

6

Requirements

• Data – Item Value & Description

• HS Codes (minimum to 8 characters)

• Commercial Invoice (Generated by FedEx Cross Border)

• Consumer – Full Contact Details, including phone and email

• Retailer requires an EORI number

• IOSS registration number

Commercial Solution – Union OSS (OSS), Order value over €150

Process

Customer Completes Retailers Checkout Duties & taxes collected by Retailer

1 Arrival @ FedEx Cross Border Basildon to be processed

2 Transported via T1² Transit document to Venlo, Netherlands

3 Customs cleared at brokerage in the Netherlands

4 Cross docking at FedEx Cross Border Venlo facility

5

Key Points

• Single clearance for all items over €150, • Import VAT charged at NL VAT rate• Import Duty charged at applicable item rate• Output (Sales) VAT to be declared to OSS• Full suite of final mile providers to provide the best

customer delivery experience

¹ VAT threshold removed as of 1st July 2021²See terms for explanation

VAT Threshold €0¹/ Duty Threshold €150


FedEx Cross Border Linehaul from Venlo to Final Mile Carriers

6

Requirements

• Data – Item Value & Description

• HS Codes (minimum to 8 characters)

• Commercial Invoice (Generated by FedEx Cross Border)

• Consumer – Full Contact Details, including phone and email

• Retailer requires an EORI number

• OSS registration number

• NL VAT registration number

Commercial Solution – IOSS, Order value below €150

Material covered by T1 document

Pre-Brexit Final-Mile Providers will remain and current transit

aims will be applicable.


FedEx Cross Border will share shipment data with the authorities providing clearance information to final mile destination

Belgium

Scenario 1 – Import One Stop Shop (IOSS), Order value below €150No VAT low value goods exemption, VAT applicable on all orders. No orders accepted into IOSS over €150

1. 2. 3. Socks

€15

Retailer to consider @ checkout:

• Product sale value• VAT @ destination country rate• Shipping costs

Clearance @ Customs:

• FedEx Cross Border clears items via Netherland’s customs

• FedEx Cross Border passes clearance information to final destination country via IOSS number

• No import VAT or admin fees due

Customer delivery:

• No charges to pay• Local delivery experience• Delivered at customer’s preferred location• Delivery confirmation

Nothing to pay

• Show/display the amount of VAT to be paid by the buyer in the EU, at the latest when the ordering process is finalised;

• Ensure the collection of VAT from the buyer on the supply of all eligible goods that have an EU Member State as their final destination;

• Make sure that eligible goods are shipped in consignments with a value not exceeding EUR 150;


VAT 19% (final mile destination

country applies)

3-8 business days

Clearance at Netherlands border

No admin fee applicable

4.

Retailer IOSS declaration and VAT monthly payment:

• VAT collected at checkout to be declared and paid in IOSS portal and VAT registration

IOSS Registration Required/ NL Import VAT to be reclaimed

Nothing to pay

€2.85 VAT to pay in monthly declaration

Scenario 2 – OSS, Order value over €150No VAT low value goods exemption, VAT applicable on all orders, duty applicable

1. 2. 3. Multiple dresses

€165


• Product sale value• VAT @ destination country rate• Duty• Shipping costs

Customer delivery:

• No charges to pay• Local delivery experience• Delivered at customer’s preferred location• Delivery confirmation

Nothing to pay

• Clearance will cover Cost, Insurance and Freight (CIF)

• Dutch VAT registration required


VAT 21% / 12% Duty

3-8 business days

Clearance at Netherlands border

2% admin fee applicable (If using FedEx Cross Border payment facilities)

4.

Retailer OSS declaration and VAT monthly payment:

• VAT collected at checkout to be declared and paid in OSS portal and VAT registration at final destination country rate

• Import VAT reclaimed or offset on VATdeclaration


• FedEx Cross Border clear items via Netherlandscustoms

• VAT or Duties to Pay

• Benefit from FedEx Cross Border’s finance and deferment facilities – all VAT and admin charges invoiced to retailer weekly

• Customer can apply for Article 23

• Retailer Importer of Record (IOR)

• €36.02 VAT + €19.80 Duties + €1.09 Admin

OSS Registration and NL VAT registration Required

€31.35 VAT to pay in monthly declaration

VAT 19%

Scenario 3 - Postal DDU (Non IOSS) – VAT, No Duties [Example below based on a shipment to Ireland]*Basket Value under duty de minimis €150

1. 2. 3. Shoes

€55


• Product sale value €55• Shipping costs - €9 (example)


• Postal Operator Clears through Destination customs

• VAT charged on entry at local rate*

Customer delivery:

• No delivery until VAT Paid• Charges to be paid @ Post Office• Any additional charges or clearance

requirements are the customer’s responsibility• High possibility of refused delivery and a

returned order

Charges €14.72 + Admin Paid on DeliveryNo Registrations Required

Customer may not understand that they will be required to pay VAT on delivery

*see slide 11 for EU country VAT rate

10Copyright® FedEx 2021

VAT 23 %

Admin fee unknown

Clearance in destination country/territory

*Subject to change based on destination country/territory

Scenario 4 - Postal DDU (Non IOSS) – VAT, No Duties [Example below based on a shipment to Ireland]*Basket Value over duty de minimis €150

1. 2. 3. Multiple Dresses

€165


• Product sale value €165• Shipping costs - €9 (example)


• Postal Operator Clears through Destination Customs

• VAT charged on entry at local rate*

Customer delivery:

• No delivery until VAT Paid• Charges to be paid @ Post Office• Any additional charges or clearance

requirements are the customer’s responsibility• High possibility of refused delivery and a

returned order

Duty 12% / Charges €59.82 + Admin Paid on Delivery

No registrations required

Customer may not understand that they will be required to pay VAT on delivery

*see slide 11 for EU country VAT rate


Clearance in destination country/territory

VAT 23 %

Admin fee unknown

*Subject to change based on destination country/territory

VAT Within the EU

The UK leaves the EU VAT regime at the end of its Brexit Transition Period – 31 December 2020. When sellers send their goods to a UK or EU customer, someone has to pay import VAT for the first time.

You can leave it to your customer, and not worry about the declaration or trying to recover any of it. This could result in a poor experience for your customer, including an extra charge and delayed delivery, which could lead to no repeat business.

The key to success is to take responsibility for payment of import VAT on the behalf of your customer.

Why is import VAT now due onecommerce UK and EU selling?

UK Sellers: After 31 December, UK sellers cannot take advantage of the current distance selling thresholds.


Source: avalara.com/Europe

Changes to EU VAT rules for B2C e-commerce sellers

We know that these new regulations could require you to make changes

to the way you operate when selling to customers in

the EU, including how you complete your shipping documentation. You can be

assured that we are taking all necessary steps to prepare our customers and

our business for the new requirements coming into force on July 1, 2021 and

will update you as soon as more clarity is provided by the European

Commission. See the European Commission website for more information.

The information provided in this document does not, and is not intended

to, constitute legal and/or tax advice; instead, this document is for general

informational purposes only. Information in this document may not

constitute the most up-to-date legal or other information. Readers of this

document should contact their own advisor to obtain advice with respect

to any particular

legal and/or tax matter. All liability with respect to actions taken or not taken

based on the contents of this site are hereby expressly disclaimed. The

content on this posting is provided “as is;” no representations are made that

the content is error-free.

https://ec.europa.eu/taxation_customs/business/vat/modernising-vat-cross-border-ecommerce_en#heading_1

shipping to the eu: how fedex and kpmg can support you

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