NEW USED PARTS ORDERING PAYMENT SHIPPING WARRANTY RETURNS
TECH RESOURCES GALLERY WANTED LINKS NEWS EBAY FAKES
NEW VAT RULES FOR THE UK AND EU
NO SALES TO THE UK UNDER 135GBP, NO SALES TO THE EU UNDER 150E.
UK
Starting January 1, 2021, shipping to the UK will be more complex due to Brexit. The UK has implemented new rules for goods imported into the UK. The biggest change is the requirement to collect VAT (Value Added Tax) on shipments to the UK.
The situation appears to be somewhat fluid. This is the current information we have available and will update it regularly as Brexit plays out. The current COVID-19 pandemic isn't making anything easier.
As a U.S. online retailer, you will now be required to create an online account with Her Majesty's Revenue and Customs (HMRC) and register for a VAT number in order to deliver e-commerce orders to the UK. You will be required to collect all VAT fees from your buyers at time of product purchase. This VAT fee was previously collected when a parcel entered the UK, typically with the buyer having to pay VAT to release the package from Customs.
VAT rates vary dependent on product price:
Most Goods and Services valued UNDER £135 have a 20% VAT Rate
Goods and services shipped to the UK with a value between £0.01 and £135 (between $1 and approximately $180 USD) will incur VAT fee of 20% of the product price (not including shipping fees). U.S. online retailers selling products to UK buyers are require to collect this 20% VAT fee at the time of sale. Online retailers will be responsible to pay all VAT collected to HMRC every three months.
VAT for Goods and Services valued OVER £135
All shipments with goods and services valued higher than £135 (approximately $180 USD) will be subject to the current VAT procedures, which state VAT is payable as the parcels are being imported into the UK. These types of packages are often cleared through customs via parcel consolidators and all applicable duties and VAT will be paid to HMRC directly by the parcel consolidator, who then normally invoices the online retailer.
Very simply, yes. Online marketplaces (OMP) such as eBay, Amazon, Etsy and others will be responsible for collecting the VAT from the buyer when the sale occurs on their website as long as the price is £135 or less. For sales that are over £135, the OMP will not collect the VAT and existing import rules will go into effect (seller pays at port of entry).
All parcel shipments into the UK will be subject to customs clearance and inspections, which could add significant delays for parcels being delivered to the buyer. U.S. online retailers shipping goods into the UK will need to provide import or export declarations to UK Customs. A customs invoice will be required for each parcel that shows UK VAT along with the product price in order for the parcel to be released out of customs.
Note: To accommodate these late breaking changes in UK shipping, we are modifying our software to accommodate new information required.
The UK is removing Low Value Consignment Relief (LVCR) – a rule that allowed goods and products from outside the EU with a value of £15 or less (estimated $20) to be tax exempt. In 2021, those products will now be subject to the 20% VAT rate.
The UK is taking these actions to ensure that UK businesses are not disadvantaged by competition from VAT free imports.
Failure to adhere to UK Customs procedures could result in:
Create an account with Her Majesty's Revenue and Customs (HMRC). This done easily online at: https://www.gov.uk/log-in-register-hmrc-online-services
Note: This is a UK website. We have no control over any changes they may make to the process, but it is pretty straightforward and should just take a few minutes.
After creating a UK Government Gateway Account, use your Government Gateway ID and Password to register with HMRC for a VAT number: https://www.gov.uk/vat-registration/how-to-register
Note: This is a UK website. We have no control over any changes they may make to the process, but it is pretty straightforward and should just take a few minutes.
Online retailers must report and pay the VAT Return (taxes) collected from their online sales each quarter to HMRC. You can find your actual deadline inside your VAT online account, but in general the deadline for HMRC’s bank to receive payment is one calendar month plus 7 days after the end of the accounting period (annual quarter). If your VAT Return payment is late, you could be liable for additional late fees.
To submit your VAT Return, you can use HMRC’s free online service or one of the many commercial accounting software platforms that HMRC has partnered with. The approved software list includes many popular solutions such as QuickBooks Online, Sage Business Cloud and SAP.
Your quarterly VAT Return should include key data points for your UK sales such as:
EU
The European Union (EU), a group of 27 countries including Germany and France, will be implementing new trade rules for U.S. sellers beginning July 1, 2021. The EU has modified the Value-Added Tax (VAT) – a tax on goods and services bought and delivered to the EU countries. Sellers in the U.S. will need to understand how to comply with these new laws and prepare for the changes.
Shipping to the EU will definitely be more complex: Merchandise that didn't require collection of VAT now does, Shipping costs are considered part of the taxable base, and HS(Harmonized System) codes are required.
These new regulations are very new and we are presenting the latest information available. We will continually update this article if and when any new information is released.
As a U.S. online retailer, you will now be required to create an online account and register for a VAT number in order to deliver e-commerce orders to the EU. You will be required to collect all VAT fees from your buyers at time of product purchase. This VAT fee was previously collected when a parcel entered the EU, typically with the buyer having to pay VAT to release the package from Customs.
Prior to July 1, 2021, no VAT fees were required for commercial goods valued up to 22 euros (approximately $26). Goods valued at 22 euros or less were able to be shipped into EU countries with no additional fees required for buyers. After July 1, 2021, all goods imported to the EU valued at up to 150 euros (approximately $178) will be subject to VAT and items valued at more than 150 euros will be subject to VAT and duties. VAT rates are different for each EU country based on the service and type of product being delivered, with most VAT fees ranging around 20% of the total cost (sales price plus shipping).
VAT rates vary dependent on product price. Previously, lower cost items were free of VAT requirements. This has changed:
The new rules give sellers two options:
#1 Preferred Method: Import One-Stop Shop (IOSS): The EU member countries have created a new electronic portal for B2C transactions, known as the IOSS, which makes it easier for online retailers to comply with the new VAT rules. This program is intended to help expedite the Customs and VAT collection process and allow the EU buyer to see the full landed cost including the VAT fees at the point of sale (i.e. inside the shopping cart).
Businesses will need to register on the IOSS portal, provide an IOSS tax identification number during Customs creation and provide the recipient’s email and/or phone number along with a Harmonized System (HS) Code for the product being shipped. Online retailers only need to be registered with a single EU member country via the IOSS system to access trading within all 27 EU countries.
Additionally, retailers will need to establish an “intermediary,” a representative located in any one of the 27 EU countries who, representing the online retailer, will submit the VAT payments each quarter as well as process any returns.
Important Note: The IOSS portal is NOT required for U.S. sellers. It is an optional program intended to expedite e-commerce order delivery to EU countries, while collecting VAT efficiently. U.S. sellers who do not register for IOSS will have their packages delivered Delivery Duty Unpaid, meaning the buyer must pay VAT and potential additional customs clearance fees before the shipping carrier will release their package.
#2 Delivery Duty Unpaid (DDU): This option only requires the recipient’s email or phone number, an accurate product description and a HS Code. The downsides to shipping orders using DDU are that if the VAT is not paid at the shopping cart, the buyer in the EU country becomes responsible for paying the fees before they can receive their product. Buyers could get “buyer’s remorse” due to high extra fees required to receive their product and abandon the order, asking for a full refund.
Additionally, not using the IOSS system can cause items to be held up in customs for lengthy periods of time until the VAT is paid. Overall, this option can lead to a poor customer experience and reflect badly on your business.
Important Note: We strong recommend our customers take the time to set up an account with IOSS and a VAT Intermediary to avoid problems with shipping to the EU.
Inport One-Stop Shop (IOSS) has been set up by a consortium of EU countries to facilitate easy importation of goods while making collection of VAT fees easy and accurate. Here is their website, which goes into great detail: IOSS.
IOSS also has published a downloadable Tip Sheet, which we suggest all online sellers take a look at.
Yes. Online retailers using marketplaces such as Amazon, eBay and Etsy will have a separate set of VAT rules. Online marketplaces (OMP), including eBay, Amazon, Etsy and others, are considered by the EU to be involved in the sale and supply of goods, and thus the EU is requiring the marketplace to be liable for collecting and paying the VAT fees. Starting July 1, 2021, Marketplaces will collect VAT from the buyer based on the country of delivery and remit it to the responsible tax authorities. Note: VAT will be collected on the full value of the transaction including shipping costs, as the shipping costs are considered part of the total purchase.
Revised: July 17, 2021.
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