Lead Adventure Forum
Other Stuff => Bazaar of Obscurities => Commercial => Topic started by: Andrew Rae on July 11, 2021, 10:21:36 AM
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Since July 1st 2021, VAT must be paid on all import online purchases made by EU customers.
An import is a sale of goods from a non-EU country for delivery to a customer in an EU country.
Please note, sales from Northern Ireland to EU countries do not count as imports and follow the rules for EU to EU sales.
VAT on orders made online can be paid in two ways:
- On import via a bill to the EU customer from the local delivery service (postal service or courier)
- At checkout when placing the order.
VAT paid on import:
- The local EU delivery service will contact the EU customer and request payment of VAT before delivery is made. See your local delivery service website for details of how they will contact you.
- Most delivery services will also charge the EU customer a fee for this procedure. Due to the July 1st changes, the fees charged by delivery services may have been reduced for orders below 150 euro. Please check your local delivery service website.
- If the order is over 150 euro (not including VAT or shipping), duty may also apply.
- VAT will be calculated from the total of the order, duty (if applied) and shipping.
- VAT may be charged at the full local rate, even if the package contains reduced rate items.
Please note, due to changes in the way delivery services pay VAT on import for orders under 150 euro - prior to then billing the EU customer – it is expected that a greater proportion of VAT due will be collected than was previously the case.
VAT paid at checkout:
In order for a seller to charge VAT at checkout, they will utilise the Import One Stop Shop scheme (IOSS), OR they will dispatch orders by a Delivered Duty Paid shipping method (DDP).
IOSS:
To make use of the IOSS procedures:
- The seller must be registered* for the IOSS;
- OR the sale must be made on an online marketplace** such as Ebay, Etsy or Amazon. Online marketplaces must collect EU VAT on all sales to EU customers;
- OR the sale must be made using a service*** that makes use of the same rules relating to online marketplaces.
Additionally:
- The IOSS procedures can only be used for orders not exceeding 150 euro (not including VAT or shipping).
- VAT must be itemised during the checkout process.
- VAT must be charged at the local rate of the EU customer.
- VAT is calculated from the order and shipping total.
- VAT must be paid when the EU customer places their order, not in a separate transaction.
- No duty is paid on IOSS VAT-paid orders as they cannot exceed 150 euro.
When dispatching an IOSS VAT-paid order, the seller will inform their shipping service of the IOSS number (either their own number or that of an online marketplace) and the information will be passed to customs and the destination delivery service. All mail to the EU must now be preceded by electronic 'pre-advice' data (sent by the shipping service) and the IOSS number and details of the order will be contained in that data. IOSS numbers will not be visible to EU customers or displayed on packages.
The stated intention of the IOSS scheme is that EU customers will not be charged any additional fees prior to delivery of their order, having paid VAT at checkout.
The postal services of the following countries have confirmed on their websites that no additional fees will be collected from the EU customer before delivery:
- Austria; Belgium; Bulgaria; Denmark; Finland; France; Germany; Ireland; Italy; Luxembourg; Malta; Netherlands; Portugal; Spain; Sweden.
For these countries, once an EU customer has paid at checkout, there should be no additional costs to them. If the delivery service requests additional fees or VAT, it is possible a mistake has been made at some point in the system and the package can be rejected by the EU customer and returned to sender.
However, the following countries' postal services have confirmed that fees will be collected from the EU customer prior to delivery of IOSS VAT-paid packages:
- Hungary; Lithuania (from October 1st); Poland.
Additional fees from these countries' postal services are an explicit part of ordering from a non-EU country, even if the IOSS is used and VAT is paid at checkout. For more information, see posta.hu, lietuvospastas.lt and poczta-polska.pl.
The remaining countries' delivery services may or may not intend to collect fees on IOSS VAT-paid packages. For more information, see the website of your local postal services****.
DDP:
When a seller dispatches orders using a DDP shipping method, any VAT, duty or fees due on import will be collected from the seller, not from the EU customer.
For this reason, sellers using DDP will likely charge 'tax' - and potentially a surcharge to cover fees - at checkout. Please note, the EU customer is not technically paying VAT at checkout – VAT is only paid on import by the shipping service. For this reason, the 'tax' may or may not equal the VAT rate of the EU customer's country. It probably will, but it might not.
DDP shipping methods can be used for orders of any value.
DDP shipping methods tend to only be available to larger volume sellers. For example, Royal Mail's forthcoming DDP service has a £5000 spend threshold for use.
Additional Notes:
- Sellers registered for VAT in a VAT area outside the EU VAT area will 'zero rate' sales to be exported from their VAT area - for example a UK VAT-registered seller will not charge UK VAT on sales to EU customers.
- However, VAT-registered sellers may have a variable gross selling price dependent on the applied VAT rate – that is to say, the net price at 20% VAT is the same as the net price at 0% VAT. This ploy is works ok if the majority of sales are within the seller's VAT area or to countries that have a high personal import threshold (USA), but less so when selling to the EU. Or Norway.
- FYI, many UK small businesses are not UK VAT-registered, as the threshold for registration is a turnover of £85,000. Therefore, those sellers cannot 'zero rate' UK VAT for export sales, as UK VAT is not applied to any sale regardless of destination.
Please remember:
- When ordering from an non-EU seller, always include a valid email address (one that you check regularly) and a valid phone number. This will allow your local delivery service to contact you if necessary.
- Do not order in the expectation of avoiding VAT and fees if buying from a seller that doesn't charge VAT at checkout – you can reject packages should you get a bill but this will cost the seller time and money.
- Do not ask sellers to undervalue packages or mark them as 'gifts'. That is fraud.
- If you are unsure what method a seller is using when they sell to EU customers, just ask. It is the responsibility of any business wishing to sell to EU customers that they make those customers aware of any potential costs.
- Read the import information provided by your local delivery service.
I hope that helps. Sorry that it's such a long list of information, but I wanted to be thorough. If you have any questions or spot any glaring errors, please let me know. I made a list in my shop that links to information from the various member state postal service websites, such that I could find. The list is down the page here: https://www.statuesqueminiatures.co.uk/info-eu-norway (https://www.statuesqueminiatures.co.uk/info-eu-norway)
* Sellers in Norway can register direct for the IOSS. Sellers in all other non-EU countries must register through an EU-based 'Intermediary', who is liable for unpaid VAT. Intermediary costs vary greatly, from 22 euro per month (plus extra costs) to several thousand euros per year for registration, filing monthly VAT returns and collateral. Once registered for the IOSS, the seller must file monthly IOSS VAT returns and pay their monthly VAT bill. The VAT is then distributed to the member states of the EU customers who made the purchases.
** Online marketplaces – those sites such as Ebay, Etsy and Amazon that provide a platform through which other sellers can sell goods - must charge VAT on import sales to EU customers. It is the responsibility of the marketplace to file VAT returns and pay VAT to the IOSS. Please note that Kickstarter is not an online marketplace.
*** Such as Taxamo Assure. This service uses the same rules that apply to online marketplaces ('deemed supplier' in IOSS-speak) by transferring a shop's checkout to their platform. For this they charge the seller £2 per order. Integrating this service into shop checkout systems is proving problematic, it seems.
**** If you can confirm whether or not your postal service collects a fee on IOSS VAT-paid packages, please let me know. I've checked every postal service website, but some information was unclear.
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Again, big thank you for the work you put into compiling this! Will share this with my local game group.
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Great work, Andrew!
I have stickied the topic for reference. As for the CoVid19 Events/Cancellations thread, it would be great if replies could focus on specific aspects, additions/clarifications/corrections, such as the specific situation in EU countries with regard to fees and procedures.
Please refrain from political discussion, as usual - this is supposed to be a practical information thread.
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I just love living in Hungary...
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Well, I don't feel as bad about all the unpainted figures now ;)
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Thanks for the information, Andrew.
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Edit: Old stuff now resolved so no longer relevant.