Shipping Costs and the VAT

Often the topic of shipping costs leads to a lot of confusion. The reason is the way VAT is calculated on shipping costs. For this, we have to take a trip into the tax law.

Shipping costs, just like packaging costs, are considered ancillary services. Ancillary services are services in which no party has an interest of its own but is necessary for providing the leading service.  The UstAE states:

In principle, a service is to be regarded as ancillary to the leading service if it is incidental to the primary service, is closely connected with it - in the sense of an economically justified rounding off and supplement - and usually occurs in its wake.

This usually applies to shipping costs. And thus, Ancillary services share the fate of the leading service for VAT purposes.

Consequences for VAT

For this reason, you have to enter the shipping costs in TYRIOS in the net. The VAT depends on which product is ordered. If only items are rated at 7% VAT, then 7% VAT will apply; if items are ordered at 19% VAT, 19% VAT will apply.

Note that there is a special rule for the post office because you do not pay VAT for postage stamps. This has consequences for your cost accounting:

• Let's assume you have bought shipping stamps worth 4,90 € at the post office. These were sold to you with 0% VAT.
• You want to charge these shipping costs now to have no fees. Then you have to deposit 4,90€ net as shipping costs.
• There are now additional 7% or 19% shipping costs for the customer, depending on which products he wants to order.

Display of shipping costs in TYRIOS

The cost calculation is quite tricky due to this legal regulation, so net shipping costs are always stored in TYRIOS. So you know for sure what expenses you have to expect for shipping. But this has the consequence that the customer has to pay different shipping costs depending on the product because his shipping costs depend on the VAT of the main product.

To solve this problem, TYRIOS uses automatic shipping cost calculation. This means that each product always states whether and how much shipping costs are incurred. TYRIOS automatically considers if there are items already in the shopping cart and shows only the difference as additional shipping costs if needed. If the maximum has already been reached, the customer has demonstrated that no further shipping costs are incurred for a new item. The product is, therefore, free of shipping costs.