Double taxation when shipping to EU countries occurs when customs levy taxes a second time, because the documents show an amount that does not match the actual value of the goods and information about VAT already paid.
Who this article is for
- For sellers on Etsy, eBay and other marketplaces who ship goods to Europe via UPS.
- For those who receive payments via PayPal and Western Bid and notice discrepancies between the amounts in the marketplace order and the amounts in the Western Bid account.
- For everyone who wants to avoid situations where a buyer pays customs duties again, even though VAT has already been paid on the marketplace.
On the avoidance of double taxation
When shipping parcels via UPS Ground and UPS Express services, their customs clearance for EU countries occurs in Poland.
- With VAT paid and the IOSS number provided, the brokerage service fee is $4 (Ground) or $2 (Express) per parcel. This amount is charged in addition to the shipping cost at checkout.
- For UPS Express shipments, if VAT is not paid, the recipient pays this tax upon receipt in accordance with the destination country’s VAT rates.
In all cases, when processing UPS to the EU, you must upload an invoice or order copy in .pdf, .png or .jpg format not larger than 5 MB, where the name and address of the recipient, the value of the goods, and VAT information (if paid) are specified.
Remember that you are responsible for the accuracy of the information provided; mistakes will lead to delays, fines, and additional costs.
To avoid double taxation, note that the value of the goods (the full value, or the discounted value) must match the order on the marketplace (Etsy, eBay and others) and in the documents when processing the shipment.
If you are processing a shipment from a transaction that has entered the Western Bid account, this amount for the goods will not include PayPal and Western Bid fees. Therefore it will differ from the amount on the marketplace order. To avoid additional questions at customs and double taxation, you should adjust the value of the goods when processing the shipment to correspond to the value of the goods on the order.
For this, when creating a shipment to EU countries, specify the current value of the goods, the amount paid to you by the buyer for the goods.
Let's take the price you need to specify as an example.
As we can see, the price of the item on Etsy is 175$. The buyer was given a discount of 43.75$. So the price of the item paid by the buyer was 175$ – 43.75$ = 131.25$. It is this price that should be listed on the invoice when creating the shipment. This price can be easily specified by copying the transaction into the External item or when creating the parcel by entering the correct amount of the attachment in the corresponding field. The Etsy order also lists the shipping cost (16.00$) and VAT (32.40$). Therefore the total amount the buyer paid became 179.65$.
In the Western Bid account, funds arrive immediately with PayPal and Western Bid fees deducted. That is, in the account, the amount of 168.47$ was displayed. As we can see, it differs from the amount stated in the Etsy order, and it is also larger than 150 euros.
And if the amount is more than 150 euros, marketplaces do not charge tax. This tax plus customs duties is paid by the recipient. Therefore, customs charge them during the clearance of the goods. So at customs, when they see an invoice for such an amount, they again start to charge duty and tax.
To avoid double taxation and correctly relay information to customs about the value of the goods, delivery, and paid duties, make sure that all documents indicate the correct value of the goods.
Example of an incorrectly created shipment where the value of the goods is stated together with the delivery cost. The correct value should be the value of the goods $131.25$, the value of the goods excluding delivery.
Example of an error that leads to double taxation
An error is a situation where the shipment’s value of the goods is shown as a total amount that includes the cost of delivery or other charges, and not the actual price of the goods 131.25 $ from the example.
In that case, customs see in the documents a higher amount than the value of the goods stated in the marketplace order, and levy additional duties and taxes on the full amount, including delivery.
Features of UPS shipments to the EU
- For UPS Ground and UPS Express to EU countries, customs clearance takes place in Poland.
- If VAT has already been paid on the marketplace and the IOSS number is provided, you also pay brokerage services: 4 $ (Ground) or 2 $ (Express) per shipment, this amount is deducted when processing the shipment.
- If VAT is not paid, the recipient pays tax upon receipt according to the destination country’s rates, and customs charges VAT and duties during clearance.
- In all cases when processing UPS to the EU, you must upload an invoice or a copy of the order in .pdf, .png or .jpg up to 5 MB with the recipient’s details, the value of goods, and information about VAT.
How to correctly indicate the price of the goods
To avoid double taxation, the cost of the goods in all documents must correspond to the amount actually paid by the buyer for the goods (taking into account the discount, but excluding delivery and fees).
- The full price or the discounted price must match in the marketplace order (Etsy, eBay, etc.) and in the documents when processing the shipment and invoice.
- If you arrange shipping from a transaction that has been entered into the Western Bid portal, the amount there does not include PayPal and Western Bid fees, so it may not match the marketplace order.
- When creating a shipment to EU countries you need to manually adjust the price of the goods and indicate the amount paid by the buyer exactly for the goods (excluding delivery and fees).
Why it’s important to monitor the €150 limit
Funds in the Western Bid account are debited with PayPal and Western Bid fees already deducted, so the displayed amount may differ from the amount on the Etsy order and still be over €150 in equivalent value.
If the value of the goods for customs exceeds €150, the marketplace does not charge VAT, and the tax plus customs duties are paid by the recipient at customs clearance.
If the invoice indicates an inflated amount (for example, including shipping or fees), customs may assess duties and taxes again, even if VAT has already been paid, which creates a double taxation situation.
Checklist to avoid double taxation
- Verify that you have an invoice or a copy of the order from the marketplace showing correct amounts for the goods, shipping and VAT.
- When processing shipments to the EU manually, specify the value of the goods that matches the amount paid by the buyer for the goods (taking into account any discount, excluding shipping).
- Do not include in the ‘Value of goods’ field the cost of shipping and payment system fees or Western Bid.
- Be sure to upload the invoice/copy of the order in .pdf, .png or .jpg format up to 5 MB, indicating VAT if it has already been paid.
- For parcels with VAT and IOSS, ensure that the IOSS number is correctly indicated when processing the shipment.
How to avoid tax problems when shipping to Europe
- Before each shipment to the EU, verify that the value of the goods in the documents matches the marketplace order and does not include shipping or fees.
- When processing UPS Ground or UPS Express, upload the invoice with correct amounts and, if necessary, provide the IOSS number.
- If you have doubts about the amount to indicate, contact Western Bid support to avoid double taxation for your customer.
If you have already encountered double taxation, gather all documents (order, invoice, shipment information) and contact Western Bid support — the team will help you navigate customs or explain the situation to the customer.