New International VAT/tax rules post 01/07/21

[richdlc]

Hi - I thought some of you would appreciate what I have learned about the new tax rules applicable from 01/July 2021. I'm an e-commerce seller of books and other aviation and military ephemera, and my main platform is eBay, so this might be more relevant to similar businesses.

SHIPPING TO THE EU:
OVERSEAS ITEMS WORTH LESS THAN €150 / £135

From 1 July 2021, the Brexit transition period ends. From this date forward, EVERYTHING sold to a country outside of the UK counts as an export, and as such is subject to VAT/tax. From 01 July, eBay should provide me with an IOSS (Import One Stop Shop) number once a customer has completed checkout. I will then make sure this number is visible on their parcel. This is to tell the customs officials in the destiation country that the relevant taxes have already been paid at point of purchase. The VAT rate for books and printed papers is 0% in the UK, but it varies by country. The good news is that eBay have an entire team dedicated to working out the tax due, which should be visible on the pre-order summary just before a customer completes checkout, and will be based on 1) the applicable VAT rate for the type of goods purchased 2) the value of the goods. If an item is won at open auction, then the final tax amount will not be visible until bidding ends. If a buyer purchases a 'buy it now' item then the applicable tax should be visible before they complete checkout.

This rule covers items less worth than €150 / £135, regardless of whether there is one item or multiple items in the order. For orders worth more than €150 / £135, please see below.

Some countries such as Australia (ABN numbers) and some US States have already implemented the collection of taxes at point of purchase, so customers in these countries will in most cases be familiar with the collection of tax when buying on eBay UK. If any additional codes are required for parcels, then I am confident that eBay will provide me with them. I will then in due course make sure they are visible on any paperwork or address labels, to show that taxes have already been paid.

current VAT rates for books can be seen here:

https://www.internationalpublishers....ks-and-vat-gst

SHIPPING TO THE EU:
OVERSEAS ORDER WORTH MORE THAN €150 / £135

If an order - whether an individual item or multiple items - is worth more than €150 / £135, then eBay will NOT provide me with an IOSS (Import One Stop Shop) number once a customer completes checkout. Currently, such orders will be subject to tax/VAT only when they enter the destination country, at the discretion of the local tax authority and based on the tax rates for the kind of item(s) purchased. *Please note* that the parcel may also be subject to a release charge by the customs agency in the destination country. This is the system as it stands - in the future, there may become available a service whereby a customer can pay all charges up front. I have made enquiries direct with ParcelForce, and also third party courier booking agents such as Interparcel. There is currently no upfront 'duties paid' service for customers - they will all have to run the gauntlet of their respective customs agencies, plus pay a potential release fee.

PRIVATE INDIVIDUALS

I assume that every single private individual sending something overseas must be prepared for the eventuality of the recipient paying VAT if applicable, and a customs release fee. I can see this catching a lot of people out. I'm not sure what the Post Office is doing, if anything. I spoke to my local Postmaster today (24th June) and he was only made aware of it via a memo yesterday, so really bugger all seems to have been done so far. This may of course change.

BUSINESSES SELLING THROUGH THEIR OWN WEBSITES

I have read in a number of places that a business can register in any eligible EU country to get an IOSS number which I believe is applicable to all shipments. The problem is that (I assume) the subsequent collection of import VAT will not be a free service. Someone has to collect this import tax and submit it to the relevant authorities, and I guess it would be a broker to whom you will have to pay a fee. I've asked my accountant to look into it in the hope that they can do it for me - I will certainly need this service should I wish to sell any more products through my own website, otherwise for now I am stuck selling things on eBay, who calculate and collect taxes for you but of course this does not take into account the fees applicable to using eBay in the first place.


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If anyone has any further comments or advice I'd like to hear them.