How to set up EU Tax Settings (applicable to EU domiciled merchants and non-EU domiciled merchants with an EU establishment)?

The below article is part of a series covering EU VAT requirements effective July 1, 2021 12:00AM CEST. See here for more information.

 

EU domiciled merchants and non-EU domiciled merchants with an EU establishment (as determined by the EU VAT Questionnaire) will be able to activate the new EU Tax Settings for their EU destination countries, starting June 28, 2021.

Once Tax Settings is activated, Wish will calculate and collect VAT for merchants’ EU-bound orders and pass the VAT amount to merchants to remit to the tax authorities. If Tax Settings is not set up, EU domiciled merchants and non-EU domiciled merchants with an EU establishment shipping orders within the EU are responsible for calculating and collecting VAT without relying on Wish’s Tax Settings support before remitting VAT to the EU tax authorities.

If merchants sell below the EU wide distance sales threshold of €10,000 and they have not waived the distance sales threshold, VAT should be charged based on the origin country of their shipment. Tax Settings on the Wish platform cannot track this, so it is not advised to set up Tax Settings. Please see here for more information on the EU wide distance sales threshold of €10,000. 

See below for a walkthrough of setting up EU Tax Settings in Merchant Dashboard (available starting June 28, 2021):

1. Navigate to Merchant Dashboard Account > Tax Settings.

2. Merchants will be brought to their Tax Settings homepage. If merchants have not previously validated their store, they must click “Validate my store” (per the below screenshot) before they can set up Tax Settings (to learn more about how to validate merchant store, please see this guide).

Note that on the homepage:

• By default, merchants will see the EU display under the “Country” column listed as “European union - MPF”, with the “Tax liability” column displaying “Wish Remits”. Wish is a Marketplace Facilitator (MPF) in the EU starting July 1, 2021 12:00AM CEST. This means that for EU domiciled merchants and non-EU domiciled merchants:
• Wish will calculate, collect, and remit VAT on EU-bound orders shipped from outside of the EU where the customer-paid price for the corresponding consignment is less than or equal to €150.
• If the EU-bound order’s customer-paid price for the corresponding consignment shipped from outside of the EU is greater than €150, Wish will calculate and collect VAT but merchants will be deemed as the importers of record and be responsible for remitting VAT at the border (detailed logistics support from Wish for this type of orders will be announced before July 1, 2021 and updated here).
• Wish will calculate and collect VAT on orders shipped within the EU regardless of the price ONLY IF you (the merchant) activate Tax Settings for the EU countries to which the goods are shipped. For intra-EU orders, EU domiciled merchants and non-EU domiciled merchants with an EU establishment will ultimately be responsible for remitting collected VAT for EU countries that are activated through Tax Settings.
• Any previous Tax Settings that EU domiciled merchants or non-EU domiciled merchants with an EU establishment have set up to have VAT collected for EU countries will remain active UNTIL new EU Tax Settings have been set up. EU countries set up using the new EU Tax Settings will be displayed under the new “European Union” row on Tax Settings homepage (see more details in Step 8 below). -
• For non-EU domiciled merchants without an EU establishment, any currently set up EU Tax Settings will be deprecated starting July 1, 2021.
• Any EU countries newly activated in Tax Settings from June 28, 2021 to June 30, 2021 will be effective on July 1, 2021 12:00AM CEST following the new EU VAT rules.

3. Once merchants have validated their store, click “Set up taxes'' to get started.

4. On the page that follows, check the “I want Wish to collect taxes from European Union (EU) customers” box. Merchants then have two options to set up EU Tax Settings:

• Provide a One Stop Shop (OSS) number for one EU country - proceed to step 5a for next steps.
• Provide VAT numbers for all EU countries you wish to set up Tax Settings for - proceed to step 5b for next steps.

5a. Click Yes, indicating that merchants have an OSS number for EU VAT purposes. Merchants with an OSS number will only need to provide their OSS number for one EU country - OSS registration enables VAT collection from all EU countries at once. Select merchants’ Country of OSS registration from the dropdown, and provide the OSS number in the corresponding field. Click “Continue” to proceed.

See step 6 to proceed.

5b. Click No, indicating that merchants do not have an OSS number for EU VAT purposes. Select all EU destination countries merchants intend to set up Tax Settings for, and click “Continue” to proceed.

On the next page, provide VAT numbers for the selected EU countries and click “Continue” to proceed to Step 6 below.

6. View a summary of the tax information you have entered. Click the checkbox at the bottom to agree that merchants are responsible for the accuracy of any information they have provided and for the collection, reporting, and payment of all taxes to the appropriate authorities, and to agree to the terms set forth in the Wish Merchant Tax Policy.

7. In the following popup modal, click “Confirm” to submit your tax settings.

8. Merchants will be returned to the Tax Settings homepage. If merchants completed the setup flow using an OSS number, they will see “Pending” display under the “Status” column in the “European Union” row. If merchants click the arrow next to this row, they will see the OSS details they provided:

If merchants completed the setup flow using VAT numbers, they can click the arrow next to “European Union” to see a status column for the individual EU countries they provided VAT numbers for:

This indicates that merchants have successfully submitted their information, which is pending review. The setup will be subject to review by Wish for validity before it becomes active.

9. Once merchants’ tax information has been successfully verified, their “Status” will display as “Active”, indicating their EU Tax Settings are now active.

10. If merchants click the tripled-dotted icon to the right of the pencil icon in the “European Union” row, they can select “Cancel tax setup” or “View tax setup details”.

• Selecting “Cancel tax setup” will result in EU domiciled merchants and non-EU domiciled merchants with EU establishment shipping orders within the EU being responsible for calculating and collecting VAT without relying on Wish’s Tax Settings support before remitting VAT to the EU tax authorities.
• If merchants select “View tax setup details”, the row will expand to display their tax information for the EU. Merchants can also view their tax information by clicking the arrow to the left of the “European Union” row.

11. Last but not least, the tax report functionality will remain as is, but the currency of each transaction will be determined by the country of OSS registration (when the OSS number is used by merchants to set up Tax Settings, as detailed above) or by the destination country of VAT registration (when the VAT number of a specific EU destination country is used by merchants to set up Tax Settings).