Introduction

After Brexit, selling to EU customers has become challenging for UK-based Shopify merchants. One major issue is the requirement to calculate and remit VAT at the point of sale for EU customers, especially for items under €150. Shopify does not currently offer a built-in integration for Taxamo Assure—a popular IOSS (Import One Stop Shop) intermediary solution used by UK businesses to manage EU VAT.

In this article, we’ll explore the benefits of Taxamo Assure, explain how to integrate it with Shopify, and discuss alternative solutions for those not on the Shopify Plus plan.

1. Why Use Taxamo Assure for EU Sales?

Taxamo Assure is designed to handle VAT calculations and compliance for cross-border EU sales. Here’s why it’s a preferred option for many UK-based Shopify merchants:

• Simplifies VAT Compliance: Taxamo Assure collects VAT from the customer at checkout and remits it on behalf of the seller, helping businesses avoid manual VAT filings.
• Supports IOSS Model: As an IOSS intermediary, Taxamo enables sellers to comply with EU regulations by charging VAT at the time of sale for items under €150.
• Affordable for Small Businesses: With a pay-as-you-go model (approximately £2 per transaction), Taxamo is a cost-effective solution compared to alternatives requiring annual fees.

2. How Taxamo Assure Works for IOSS Compliance

The IOSS simplifies VAT processes for cross-border e-commerce by allowing merchants to charge VAT at checkout. Here’s a quick breakdown of how Taxamo Assure operates:

1. VAT Calculation at Checkout: Taxamo calculates VAT at the customer’s applicable rate based on their location.
2. VAT Collection and Remittance: Taxamo collects VAT from customers during the transaction and handles remittance to EU authorities.
3. Reporting and Compliance: Taxamo provides a monthly VAT report, ensuring compliance and reducing administrative burden for businesses.

This setup eliminates the need for individual VAT filings across multiple EU countries, streamlining compliance and reducing costs for UK merchants.

3. Limitations for Shopify Basic & Advanced Users

While Shopify offers an API for integrating third-party tools like Taxamo, this functionality is restricted to Shopify Plus users who can access the checkout API. Here are some limitations for non-Plus users:

• No Direct Integration: Non-Plus Shopify users cannot integrate Taxamo Assure directly into the checkout process, limiting seamless tax collection.
• Manual Workarounds Required: Without the API, merchants may need to use manual methods, such as adjusting VAT rates at checkout or using third-party apps that do not fully integrate.
• Increased Costs: For smaller businesses, the upgrade to Shopify Plus may be prohibitively expensive just to gain access to the checkout API.

4. Steps to Integrate Taxamo Assure with Shopify Plus

For those on Shopify Plus, here’s how to set up Taxamo Assure to manage VAT compliance for EU customers:

1. Create a Taxamo Account: Sign up for Taxamo Assure and complete the registration process. You’ll gain access to the Taxamo dashboard and API documentation.
2. Generate API Credentials: Once you’ve created an account, navigate to the API section to generate your API credentials, which will be required for the integration.
3. Implement API Calls: Use the Shopify checkout API to integrate Taxamo for VAT calculation and collection at checkout. This requires development expertise or assistance from a Shopify Plus Partner.
4. Test the Integration: Before going live, test the integration with sample transactions to confirm VAT is calculated and displayed accurately at checkout.
5. Enable Live Transactions: Once testing is complete, enable live transactions in your Shopify checkout to begin collecting VAT on EU orders seamlessly.

Note that this setup requires coding knowledge, and many merchants may need to consult a developer experienced with Shopify’s APIs.

5. Alternative Solutions for Non-Plus Shopify Users

For merchants on Basic or Advanced Shopify plans, here are some alternative options to consider for VAT compliance in the EU:

• Use Crossborderit (CBIT): CBIT offers an IOSS and landed cost solution with lower monthly fees. They provide a Shopify app that automates VAT compliance for cross-border sales.
• Explore Avalara: Avalara provides IOSS registration and VAT reporting, and although currently more suitable for Shopify Plus users, discussions are underway for potential expansion.
• Manual VAT Adjustments: Merchants can adjust VAT manually in Shopify’s tax settings. However, this method is limited and may not fully comply with IOSS requirements.
• Partner with Royal Mail for DDP Options: Royal Mail’s Delivery Duties Paid (DDP) program can help manage VAT at the point of delivery, though this may result in higher shipping costs.

6. Challenges of Using Taxamo Assure for UK Merchants

While Taxamo Assure offers benefits, there are several challenges UK merchants may face:

• Lack of Shopify Integration for Small Merchants: Many small UK merchants cannot justify the cost of upgrading to Shopify Plus solely for IOSS compliance, limiting their ability to integrate Taxamo directly.
• Communication and Support Limitations: Some users report difficulty in getting specific integration advice from Taxamo’s support team, creating challenges for non-technical merchants.
• Brexit Complexity: The post-Brexit VAT landscape continues to evolve, and options like Taxamo may still require additional setup and compliance monitoring to keep up with regulatory changes.

Conclusion

Taxamo Assure can be a valuable solution for UK Shopify merchants aiming to simplify VAT compliance on EU sales. However, due to Shopify’s restrictions on API access for non-Plus users, many merchants may need to explore alternative solutions or consider a Shopify Plus upgrade.

If you are a Shopify Plus user, Taxamo provides a way to manage VAT seamlessly and keep your EU sales flowing smoothly. Non-Plus users should evaluate whether alternatives like Crossborderit or Avalara suit their needs, as well as monitor future Shopify updates for potential integration options.

FAQs

• Can I use Taxamo Assure if I am not a Shopify Plus user?
  Unfortunately, only Shopify Plus users can access the checkout API needed to integrate Taxamo Assure directly. Non-Plus users may need to consider alternatives or workarounds.
• What is the IOSS, and why is it important for UK businesses selling to the EU?
  The Import One Stop Shop (IOSS) is a VAT collection system that allows merchants to remit VAT on sales under €150 directly at checkout, simplifying compliance and avoiding extra costs for customers.
• Are there other options besides Taxamo for IOSS compliance?
  Yes, Crossborderit (CBIT) and Avalara also offer IOSS services and have options for smaller businesses.
• How much does Taxamo Assure cost?
  Taxamo charges approximately £2 per transaction, making it a pay-as-you-go model suitable for small-to-medium-sized businesses with EU customers.
• How can I get support if I face issues with Taxamo integration?
  If you need assistance, contacting Taxamo support or consulting a Shopify Partner developer experienced with checkout API integrations is recommended.