Recently in CJ Facebook group, many drop shippers post questions about VAT and IOSS which took place since July 1^st, So this article is going to explain these two concepts again and demonstrate how you can register for IOSS and set your IOSS declaration on CJ.

We also post a video version of this article:

What is VAT?

To explain VAT (value-added tax), let’s use an example for easier understanding.

If the VAT rate is 10%, a farmer sells 1 bag of apples to a baker for 70 pennies, and the baker made a jar of apple jam and sells it to the customer for 5 pounds. During this process, the baker paid 77 pennies to the farmer, of which 7 is the VAT fee that got paid to the government by the farmer. When this apple jam got on the shelf, the customer needs to pay 5.5 pounds for it, as 50 pennies in which is the VAT fee, and the baker will pay 50-7, 43 pennies to the government.

This is VAT, a consumption tax placed on a product whenever value is added at each stage of the supply chain.

What is IOSS?

IOSS means the Import One-Stop Shop. It is the electronic portal businesses can use since July 1^st, 2021, used to comply with e-commerce VAT obligations on distance sales of imported goods.

So, what is the IOSS for? The IOSS allows suppliers selling imported goods to buyers 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 was previously the case.

So when it comes to selling to the EU, there are two occasions:

1. The order values > 150 euros

When the order value is above 150 euros, the recipient will be required to pay VAT and customs duties.

2. The order values <= 150 euros

To facilitate the delivery process of parcels to EU countries, CJ has enabled IOSS Declaration options in Profile > IOSS Setting including:

1. Declaration Amount;

2. Declaration Options:

• Declaration with no IOSS;
• Declaration with my own IOSS;
• Declaration with CJ's IOSS.
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3. Sync IOSS Setting.

1. Declaration Amount;

You may either declare by Store Order Amount or CJ Order Amount for different countries by clicking "Action > Edit Countries"

Store Order Amount: Your store order amount (if available) will be declared, otherwise, CJ order amount will be declared. The recipient will be required to pay VAT for orders valued above €150.

CJ Order Amount: CJ order amount will be declared. The recipient will be required to pay VAT for orders valued above €150.

2. Declaration Options.

a. Declaration with no IOSS.

The recipient will be required to pay VAT to complete customs clearance, otherwise, the parcel will be detained or destructed by the customs. This option is recommended for CJ users who have a low margin on their product prices.

b. Declaration with my own IOSS.

If you have your own IOSS ID, you can link it to your CJ account in Profile > IOSS Setting > Add IOSS. We highly recommend you declare with your own IOSS which is valid and is linked to the destination country in the EU.

*VAT upon declaration will be settled with your IOSS ID, in this case, please take potential VAT required into consideration regarding pricing in your store.

c. Declaration with CJ's IOSS.

If you are not from an EU country or simply don't have your own IOSS, you can declare with CJ's IOSS ID after editing the countries under IOSS Option > Declare with CJ's IOSS. 

CJ's IOSS ID will not be applicable for orders valued above €150.

*For regular orders, you will need to pay the VAT and IOSS handling fee (VAT*3%) if you declare with CJ’s IOSS ID when you submit orders on CJ. You can also view the order details below after payment.

3. Sync IOSS Setting.

When you place orders manually or import orders by Excel and don't fill in the IOSS number, it will be applied as your setting in My CJ > Profile. If you want to change it, you can change the setting in Profile and click "Sync IOSS Setting" to make it.

If you have any other questions, feel free to post them to our Facebook group or register to CJ and ask for help from your personal agent!