Crossborderit (CBIT) application and Shopify setup can help you
December 16, 2022
Physical customs controls have long been the predominant means of enforcing tax borders between countries. Many tax authorities have historically set specific minimum limits to minimize border friction and optimize resources. Goods imported below these thresholds would be exempt from VAT, while cross-border services would often be taxed in the country of the service provider or, in some cases, be exempt from VAT collection altogether.
However, in recent years, due to a massive increase in the volume of cross-border trade in low-value goods and digital services, many of which are difficult or impossible to verify at the border, tax administrations have taken steps to tax such imports. In the country where they are consumed. Specific recommendations were made for low-value goods. In July 2021, the EU e-commerce VAT package provided the framework for accounting for taxes due in a simple and low-cost manner for both the supplier and the tax administration.
IOSS and intermediaries
Parcels above the low value shipping allowance threshold (which was €22 in most EU member states) purchased online from outside the EU have always been subject to tax in the EU.
The appointment of the intermediary (such as Crossborderit) provides assurances to member states that retailers located in countries without mutual assistance agreements have a local representative who can support queries and audits related to EU VAT obligations; the intermediary is also there to make payment in the event of non-compliance, in most member states.
Acting on behalf of a supplier selling in the EU, the intermediary is responsible for filing IOSS returns, making payment and providing the relevant tax administration with all relevant data requested.
CBIT and Shopify
Crossborderit(CBIT) integrates with Shopify. The Crossborderit app, along with Shopify's tax and duty calculator, allows merchants to calculate taxes at checkout, report shipments using their CBIT IOSS number and enter EU countries under the new "one-stop-shop" rules.
The current Crossborderit application allows for automatic reporting of IOSS shipments. Future versions will allow for VAT collection at checkout.
Crossborderit's Shopify application costs $24 per month. When this fee is charged on Shopify, it will replace the €19.99 fee Crossborderit charges for access to the CBIT system. This access includes all reporting, fulfillment and system access.
Access to the Crossborderit app requires a three-month deposit for the cost of the app subscription. The European tax authorities require a three-month period for the use of a European intermediary.
Simply register and let Crossborderit take care of the rest.